The story so far: The Income Tax Bill 2025, which seeks to replace the Income Tax Act of 1961, was passed by Parliament in the ongoing monsoon session. The Bill is significantly shorter, more concise, and has clearer legislation. However, it also incorporates some new elements that could be problematic.
Why was a new law needed?
The Income Tax Act, 1961 is outdated, and over the years has been amended numerous times, leading to income tax legislation in India being convoluted and difficult for an average citizen to understand. It also provided tax officials ample scope for harassment due to the discretion the law afforded them. In the new Bill, the number of chapters has been brought down to 23 from 47 in the Income Tax Act, 1961, and the number of Sections to 536 from 819.
Moreover, in order to provide greater clarity, the new Bill has increased the number of tables to 57 from 18 and the number of formulae to 46 from six. Most importantly, the language has been greatly simplified. Jargon has been removed as much as possible, and examples have been provided where needed.
Little has changed in the Income-Tax Bill, 2025
