MM TAX CLUB

The Indian government is set to introduce the much-anticipated New Income Tax Bill 2025 in Parliament on February 13, 2025. This bill aims to simplify tax laws, enhance compliance, and make the tax system more transparent for individuals and businesses alike. Here’s a detailed breakdown of the key changes and their impact.

1. Simplification of Tax Laws

One of the biggest highlights of the new bill is the simplification of tax provisions. The government has reduced the number of sections by approximately 25-30%, eliminating outdated and ambiguous provisions. The new bill also introduces tables for tax rate calculations, making it easier for taxpayers to understand their obligations.

2. Introduction of the ‘Tax Year’ Concept

The bill replaces the traditional terms ‘Assessment Year’ and ‘Previous Year’ with ‘Tax Year’ and ‘Financial Year’ to align with global standards and reduce confusion in tax filings.

3. Revised Income Tax Slabs

The bill proposes a revision in the income tax slabs to provide relief to taxpayers:

• ₹0 to ₹4 lakh – Nil

• ₹4 lakh to ₹8 lakh – 5%

• ₹8 lakh to ₹12 lakh – 10%

• ₹12 lakh to ₹16 lakh – 15%

• ₹16 lakh to ₹20 lakh – 20%

• ₹20 lakh to ₹24 lakh – 25%

• Above ₹24 lakh – 30%

Additionally, the standard deduction has been increased from ₹50,000 to ₹75,000, offering more savings to salaried individuals.

4. Enhanced Compliance and Digital Monitoring

The bill empowers the Central Board of Direct Taxes (CBDT) to establish tax administration rules and compliance measures without frequent legislative changes. There will be greater use of digital monitoring systems to ensure transparency and efficiency.

5. Virtual Digital Assets as ‘Undisclosed Income’

The bill classifies Virtual Digital Assets (VDAs), including cryptocurrencies, as ‘undisclosed income’ if discovered during tax searches. This move aims to regulate and tax digital transactions effectively.

6. Streamlined Tax Filing Deadlines

The new bill retains existing tax filing deadlines but emphasizes stricter compliance measures for timely submissions.

Final Thoughts

The New Income Tax Bill 2025 is a significant step toward a simpler, more transparent, and globally aligned tax system. With revised tax slabs, improved compliance mechanisms, and enhanced digital monitoring, the bill is expected to benefit both taxpayers and the government.

Stay tuned for further updates as we analyze the complete bill once it is tabled in Parliament. Let us know in the comments how these changes will impact you!

Download Income Tax Bill 2025 PDF