Finance Minister Nirmala Sitharaman Introduces New Income Tax Bill in Lok Sabha: Key Changes Explained

New Delhi (The Uttam Hindu): Finance Minister Nirmala Sitharaman on Thursday introduced the new Income Tax Bill 2025 in the Lok Sabha. In the new bill, the government has emphasized on simplification of laws. The new law will replace the old Income Tax Act, 1961, which has become outdated at present and has become very complicated due to frequent amendments. In the new Income Tax Bill 2025, the government has emphasized on reforms and simplification of the law.

The number of sections in the new Income Tax Bill 2025 has been reduced from 819 to 536. Unnecessary exemptions have been eliminated and the total word count in the new bill has been reduced from 5 lakh to 2.5 lakh. The new Income Tax Bill focuses on making things easier. Also, 'Assessment Year' will be replaced by 'Tax Year'. The new tax law will come into effect from April 1, 2026.

After being introduced in the Lok Sabha, the new law will be referred to the Parliamentary Standing Committee on Finance for further deliberations. The bill will not change the existing tax slabs or reduce the tax exemptions offered. Instead, the new law aims to make the six-decade-old law compatible with the current times.

This will strengthen India's tax base and improve income stability in the long run. This law also brings India's tax system closer to global best practices. A key feature of the new Income Tax Bill 2025 is its focus on technology-driven assessments.

To ensure greater clarity, the new Income Tax Bill also includes tables, examples and formulas to explain the tax provisions to make interpretation easier for individuals and businesses. By simplifying tax laws, the new Income Tax Bill 2025 is an attempt by the government to make businesses focus on growth and not on tax planning. This will help in boosting the country's economy.