New Income Tax Bill to be taken up in monsoon session in July: FM Sitharaman

Finance Minister Nirmala Sitharaman on Tuesday while discussing the Finance Bill in the Lok Sabha said the new Income Tax Bill will be taken up for discussion in the monsoon session of Parliament. She also added that Finance Bill 2025 will provide unprecedented tax relief to honour taxpayers.

Addressing the Lok Sabha Finance Bill discussion, FM Sitharaman announced that the bill proposes to remove 7 customs tariff rates for industrial goods

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The Income-Tax Bill of 2025 was presented in Lok Sabha on February 13, 2025, with the objective of superseding the existing Income-Tax Act of 1961. While largely preserving the key provisions of the 1961 Act, the primary goal of the Bill is to streamline the language and eliminate outdated clauses for increased efficiency.

Top points of New Income Tax Bill 

The new Income Tax Bill has introduced the concept of tax year to replace the previous terms of 'previous year' and 'assessment year'. According to the FAQs released by the Income Tax Department, the use of 'previous year' and 'assessment year' was causing confusion among taxpayers as they corresponded to different financial years. 

With the alignment of the 'previous year' with the financial year, or part of the financial year in specific cases, the need for two separate terms is no longer necessary. The term 'Tax year' is commonly used in income tax legislation in comparable tax jurisdictions.

The new Income Tax Bill has undergone a substantial reduction in text when compared to the existing Income Tax Act. Currently, the Income Tax Act comprises 47 Chapters, 819 effective sections, and 5.12 lakhs words, including approximately 1200 provisions and 900 explanations that have been omitted in the new Bill. Conversely, the forthcoming Income Tax Bill will consist of 23 chapters, 536 sections, and 2.60 lakh words.

The drafting of the new Income Tax Bill has been done in a structured manner, consolidating all provisions and explanations in one place rather than dispersing them throughout the Income Tax Act. This organization into sub-sections, clauses, and sub-clauses enhances the readability of the new tax Bill.