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The new income tax bill, known as the ‘Income Tax Bill 2025’, comprises 600 pages, 23 chapters, 16 schedules, and 536 clauses (to become Sections after the bill is passed).
New Income Tax Bill proposes to replace the words ‘assessment year’, ‘financial year’, and ‘previous year’ with just one word ‘tax year’.
The new income tax bill, known as the ‘Income Tax Bill 2025’, is proposed to be implement from April 1, 2026. The bill comprises 600 pages, 23 chapters, 16 schedules, and 536 clauses (to become Sections after the bill is passed), according to sources.
The bill proposes to replace the words ‘assessment year’, ‘financial year’, and ‘previous year’ with just one word ‘tax year’, the sources said. The tax year would define the 12-month financial period starting from April 1, 2026.
Importantly, no changes in short-term capital gains (STCG) tax duration and rates have been made. The STCG tenure remains 12 months, according to the sources.
The existing Income Tax Act, 1961, has a total of 298 Sections. It has been increased to 536 Clauses in the latest I-T bill for better clarity in the language, said the sources.
Importantly, this is the sixth income tax bill ever in India. The new bill will replace the existing Income Tax Act, 1961.
The bill is likely to be introduced in Parliament on Thursday.
Why a New Income Tax Bill?
The existing Income Tax Act, 1961, has undergone numerous amendments over the decades, making it complex and difficult for taxpayers to navigate. The new Income Tax Bill intends to:
– Simplify tax provisions with clearer language
– Reduce legal disputes by removing ambiguities
– Make compliance easier for individuals and businesses
– Promote a trust-based tax system, where scrutiny comes later.
During her Budget Speech 2025, Finance Minister Nirmala Sitharaman said the bill would embody the same philosophy of Nyaya that was at the heart of Bharatiya Nyaya Sanhita. The law had repealed the Indian Penal Code of 1860 from July 2024.
In the Budget Speech, she said, “I am happy to inform this August House and the country that the new income-tax bill will carry forward the same spirit of “Nyaya”. The new bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.”
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