<p>A new <a href="https://www.deccanherald.com/tags/income-tax">Income Tax</a> Act is likely to come into force from April 1, 2026, replacing the over six-decade old Income Tax Act, 1961. The central government will table the Income Tax Bill, 2025 in the Lok Sabha on February 13. The bill proposes to make the country’s direct tax system concise and simpler for common people to understand. In this issue of <strong>DH Deciphers</strong>, <em>Gyanendra Keshri</em> decodes the new tax bill and its impact on the common people.</p> <p><strong>Will the new Act increase or decrease in tax liabilities?</strong></p> <p>The Income Tax Bill, 2025 does not propose any change in tax rates and slabs. It is unlikely to introduce any new tax provisions or amend existing tax rates. The tax slabs and rates announced in the <a href="https://www.deccanherald.com/union-budget-2025">Union Budget 2025</a>-26 presented earlier this month will be applicable for the year 2025-26. For the current financial year the rates will be as announced in the last year’s budget. Therefore, the tax liabilities are not going to increase or decline due to the new Income Tax Bill.</p> <p><strong>What is the purpose of the change in the Act?</strong></p> <p>The main objective of the new bill is to make the income tax regulations concise and easier for common people to understand. It seeks to remove redundant provisions and simplify the language. It encourages voluntary compliance by taxpayers and promotes ease of doing business. In her ‘statement of objects and reasons’ of the new bill, Finance Minister Nirmala Sitharaman noted: “The Income-tax Act passed in 1961 has been subjected to numerous amendments since its passage sixty years ago. As a result of these amendments the basic structure of the Act has been overburdened and language has become complex, increasing cost of compliance for taxpayers and hampering efficiency of direct-tax administration.”</p>.New Income Tax Bill likely to be tabled in Parliament on Feb 13: All you need to know. <p><strong>What is a ‘tax year’ proposed in the new bill?</strong></p> <p>As per the existing Act, there is a concept of financial year (FY) and assessment year (AY). Assessment year is the year followed by the financial year in which income is earned. For example, for the financial year 2024-25 the assessment year will be 2025-26. Taxpayers often get confused with these two years, because of which many file taxes for the wrong assessment year. This leads to delays in refunds and other hassles. Under the new law the concept of assessment year will be removed. Now it will be called tax year. It will be defined as the twelve months period of the financial year commencing on the 1st April. Further, the new tax bill says, in the case of a new business or professional venture, or a source of income newly coming into existence, the tax year shall be the period beginning with the date of setting up of such business or profession; or the date on which such source of income newly comes into existence, and, ending with the said financial year. There is no change in the definition of financial year, it will start from April 1 and end on March 31.</p>.<p><strong>Is the new bill concise?</strong></p> <p>The new bill has 622 pages, which is nearly half of the existing Act. Originally the Income Tax Act, 1961 had 880 pages. The number of pages increased further due to amendments introduced over the years. The new bill has 536 sections, which is higher than 298 sections in the existing Act. The number of schedules in the new bill is also higher at 16 against the 14 in the existing law. However, the number of chapters remains unchanged at 23.</p> <p><strong>When is the new Act likely to be implemented?</strong></p> <p>The Income Tax Bill, 2025 will be tabled in Lok Sabha on Thursday. After the introduction in Lok Sabha it is likely to be sent to a parliamentary standing committee for scrutiny. Then it will be discussed and passed by the both houses of parliament. Then it will be sent to the President for her assent. Upon completion of all these processes it will be called the Income-tax Act, 2025. It is proposed to come into force from April 1, 2026.</p>
<p>A new <a href="https://www.deccanherald.com/tags/income-tax">Income Tax</a> Act is likely to come into force from April 1, 2026, replacing the over six-decade old Income Tax Act, 1961. The central government will table the Income Tax Bill, 2025 in the Lok Sabha on February 13. The bill proposes to make the country’s direct tax system concise and simpler for common people to understand. In this issue of <strong>DH Deciphers</strong>, <em>Gyanendra Keshri</em> decodes the new tax bill and its impact on the common people.</p> <p><strong>Will the new Act increase or decrease in tax liabilities?</strong></p> <p>The Income Tax Bill, 2025 does not propose any change in tax rates and slabs. It is unlikely to introduce any new tax provisions or amend existing tax rates. The tax slabs and rates announced in the <a href="https://www.deccanherald.com/union-budget-2025">Union Budget 2025</a>-26 presented earlier this month will be applicable for the year 2025-26. For the current financial year the rates will be as announced in the last year’s budget. Therefore, the tax liabilities are not going to increase or decline due to the new Income Tax Bill.</p> <p><strong>What is the purpose of the change in the Act?</strong></p> <p>The main objective of the new bill is to make the income tax regulations concise and easier for common people to understand. It seeks to remove redundant provisions and simplify the language. It encourages voluntary compliance by taxpayers and promotes ease of doing business. In her ‘statement of objects and reasons’ of the new bill, Finance Minister Nirmala Sitharaman noted: “The Income-tax Act passed in 1961 has been subjected to numerous amendments since its passage sixty years ago. As a result of these amendments the basic structure of the Act has been overburdened and language has become complex, increasing cost of compliance for taxpayers and hampering efficiency of direct-tax administration.”</p>.New Income Tax Bill likely to be tabled in Parliament on Feb 13: All you need to know. <p><strong>What is a ‘tax year’ proposed in the new bill?</strong></p> <p>As per the existing Act, there is a concept of financial year (FY) and assessment year (AY). Assessment year is the year followed by the financial year in which income is earned. For example, for the financial year 2024-25 the assessment year will be 2025-26. Taxpayers often get confused with these two years, because of which many file taxes for the wrong assessment year. This leads to delays in refunds and other hassles. Under the new law the concept of assessment year will be removed. Now it will be called tax year. It will be defined as the twelve months period of the financial year commencing on the 1st April. Further, the new tax bill says, in the case of a new business or professional venture, or a source of income newly coming into existence, the tax year shall be the period beginning with the date of setting up of such business or profession; or the date on which such source of income newly comes into existence, and, ending with the said financial year. There is no change in the definition of financial year, it will start from April 1 and end on March 31.</p>.<p><strong>Is the new bill concise?</strong></p> <p>The new bill has 622 pages, which is nearly half of the existing Act. Originally the Income Tax Act, 1961 had 880 pages. The number of pages increased further due to amendments introduced over the years. The new bill has 536 sections, which is higher than 298 sections in the existing Act. The number of schedules in the new bill is also higher at 16 against the 14 in the existing law. However, the number of chapters remains unchanged at 23.</p> <p><strong>When is the new Act likely to be implemented?</strong></p> <p>The Income Tax Bill, 2025 will be tabled in Lok Sabha on Thursday. After the introduction in Lok Sabha it is likely to be sent to a parliamentary standing committee for scrutiny. Then it will be discussed and passed by the both houses of parliament. Then it will be sent to the President for her assent. Upon completion of all these processes it will be called the Income-tax Act, 2025. It is proposed to come into force from April 1, 2026.</p>