The new bill introduces simplified language and modern terminology, by replacing outdated terms and bringing in new ones to align with today's economy
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Union Finance Minister Nirmala Sitharaman on Thursday tabled the New Income Tax Bill 2025 in Lok Sabha, which aims to simplify tax laws, modernise definitions, and provide more clarity on various tax-related matters, ANI reported.
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As per ANI, the government's new bill seeks to replace the existing 1961 Income Tax Act and introduce changes that affect different categories of taxpayers, including individuals, businesses, and non-profit organisations.
After presenting the income tax bill the Finance Minister asked the Lok Sabha Speaker Om Birla to nominate members for a standing committee to review the newly tabled income tax bill.
Notably, the new bill introduces simplified language and modern terminology, by replacing outdated terms and bringing in new ones to align with today's economy, ANI cited.
According to ANI, it introduces the term "tax year" instead of the existing terms like financial year and assessment year systems. It also defines "virtual digital asset" and "electronic mode", reflecting the growing importance of digital transactions and cryptocurrency in today's financial landscape.
In terms of scope of total income, the new bill maintains the existing tax principles while making certain clarifications. Under the previous law, Sections 5 and 9 of the Income Tax Act, 1961, it stated that the Indian residents were taxed on their global income, while non-residents were taxed only on the income they earned in India.
The new bill, in Clauses 5 and 9, keeps this rule but provides a more clear definition of deemed income, such as payments made to specific individuals, making tax rules more transparent for non-residents, ANI reported.
Moreover, the bill brings changes to deductions and exemptions. Earlier, Sections 10 and 80C to 80U of the Income Tax Act, 1961, allowed deductions for investments, donations, and specific expenses.
The new bill, under Clauses 11 to 154, consolidates these deductions and introduces new provisions to support startups, digital businesses, and renewable energy investments, ANI reported.
As per ANI, changes have also been made to the term capital gains tax. Under the previous law, Sections 45 to 55A categorised capital gains into short-term and long-term based on holding periods, with special tax rates for securities.
The new bill, in Clauses 67 to 91, keeps the same categorisation but introduces explicit provisions for virtual digital assets while updating beneficial tax rates. This ensures that digital assets, such as cryptocurrency, are covered under a proper tax framework.
In the previous law, under Sections 11 to 13, non-profit organisations were provided income tax exemptions for certain charitable purposes but had limited compliance guidelines, ANI reported.
The new bill, in Clauses 332 to 355, establishes a more detailed framework by clearly defining taxable income, compliance rules, and restrictions on commercial activities. This not only introduces a stricter compliance regime but also provides well-defined exemptions.
Overall, the Income Tax Bill 2025 aims to simplify tax laws, encourage digital and startup investments, and bring greater clarity in taxation policies for businesses and non-profits, ANI reported.
The government believes that these changes will make tax compliance easier while ensuring a fair tax structure for all categories of taxpayers.
(With ANI inputs)
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