The new Income Tax Bill proposes the 23 chapters and 16 schedules, and simplify “ Tax year” term. The tax year will define the twelve-month financial period, starts from April 1, 2026. The government will expected to announce the New Income Tax Bill on 13 Feb, Thursday. The proposed legislation spans for more than 600 pages and seeks to replace the six-decade-old Income Tax Act, 1961. Once it passed, the new law will called the New Income Tax Bill 2025, and it will be effective from 1 April 2026
The bill will propose expanded definitions regarding digital transactions, crypto-assets, and electronic record-keeping. It also introduces “Finance Units” and “Finance Companies” in terms of dividends. Under the part of new compliance and procedural changes, the bill introduces the Taxpayer’s Charter. It also consists of the brief section suggests the foreign companies be deemed as residents under specific conditions.
New income tax bill 2025 simplify the Tax year
The new income tax bill 2025 simplify tax year, and set to change. The “ tax year” term replaces the “Assessment Year,” and “Financial Year” and “Previous Year.” As per Dhruva Advisors, there are no big changes in tax rates in the new bill. The language used for general business deductions under Section 37 remains unchanged. Depreciation will treated as a deduction instead of allowance.
The tax bill also consists the Taxpayer’s Charter into the Finance Bill to improve transparency and taxpayer rights.
Tax Slabs Under Income Tax Bill
Here are new tax slabs expected under the New Income Tax Bill 2025
- Up to Rs 4,00,000: No tax will levied.
- From Rs 4,00,001 to Rs 8,00,000: The tax rate is 5%.
- From Rs 8,00,001 to Rs 12,00,000: The tax rate is 10%.
- From Rs 12,00,001 to Rs 16,00,000: The tax rate is 15%.
- From Rs 16,00,001 to Rs 20,00,000: The tax rate is 20%.
- From Rs 20,00,001 to Rs 24,00,000: The tax rate is 25%.
- Above Rs 24,00,000: The tax rate is 30%
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