New Income Tax Act 2025 :
One amendment in the Income Tax bill replaces the traditional concept of the “assessment year” with the term “Tax year”. The government decided to release a new Income Tax Bill to the public which is scheduled for presentation in Parliament on 13th February 2025.
Friday 7th Feb, 2025 in New Delhi the Union Finance Minister Nirmala Sitharaman arrives at the Parliament for a budget session. The Income Tax Act 1961 will be replaced by new legislation, Once it is replaced it will be called as Income Tax Act 2025.
On Thursday, in the Lok Sabha, the new Income Tax bill is expected introduced by the new legislature. The Income Tax Act 1961 will be expected to replace 2025, the new income tax concept of ‘income tax year’ starting from April month. The 1961 Act of the Income Tax will remove the concept in this running year. If the new bill passes it will effected from the following year April 2026.
- Key points :
The term “assessment year” will replaced by the “Tax year” and “previous year” replaced by the term “Financial year”.
The incoming income tax legislation will remove the mention of Assessment year approving the term Tax year.
New income tax billing is shared with the parliament members, newly set up and businesses have to pay tax from the date starting of business and end with financial year date. This means that they have to pay taxes according to their economic activity and earning process in that particular period.
Income tax billing follows a systematic year process, where tax billing is appraised income from the previous year of finance. For example, income earned in the financial year 2023-2024 (April 1, 2023 to March 31st, 2024)
The introduction of the Income Tax Act 2025 by Minister Nirmala Sitharaman crucial moment for India’s taxation system. This legislation represents a more efficient, transparent, and technology-driven approach to the tax department.
Replacing the 60-year law :
The Income Tax Act 1961 will be expectedly replaced in 2025 and it will affect the finance and economy of the country from the following year 2026. The new act of Income tax will be called Income Tax Act, 2025. According to Maheshwari, the old Income Tax Act was amended 60 years old. It results in numerous references and outdated dates, years are removed now. Another change in the act introduced section 275(6) which instructed that the Dispute Resolution Panel must provide detailed directions, decisions, and reasons behind them. This indicator is from the earlier section 144C, which has a lack of clarity in issuing DRP. In October the Income Tax department organized an internal committee to analyze the Income Tax Act. They invited the public from four different areas from there they received approximately 6500 responses and suggestions from the public. To simplify the tax law it is not the first attempt by the tax department, in 2018 the government formed a force to draft a new tax law. The report was submitted in 2019 by the task force to the Government.
The bill includes of :
536 sections
622 pages
23 chapters
16 schedules
The bill was approved by the Union cabinet on 7th February. After passing the approval in the Lok Sabha it will be sent to Parliament Committee on Finance for the confirmation discussion.
A highly notable change in the tax act by the bill is the turn of “Assessment year” to “Tax Year” This is a significant change towards modernizing India’s tax frame, it brings better clarity and efficiency.