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Compared to the Income Tax Act, 1961, the new Income Tax Bill 2025 proposes to remove provisions and explanations, and wherever necessary, tables have been inserted to make it more clear and adornment.
Income tax bill, 2025, vs. Income Tax Act, 1961.
New Income Tax Bill 2025 vs. Old Income Tax Act, 1961: Finance minister Nirmala sitarman New introduced on Thursday Income tax bill, 2025The bill tries to simplify the language of the law, introducing tables and formulas to change the complex legal language. Connected provisions have been brought together to one place and one can determine tax liability based on the nature of the business.
Income tax bill 2025 PDF Can be downloaded from here: https://sansad.in/ls/legislation/bills,
Mumbai -based Chartered Accountant Suresh Surana shared his insight on the Income Tax Bill 2025 and is different from the Income Tax Act, 1961.
1. Income Tax Bill 2025 vs. Income Tax Act, 1961: An observation
The Income Tax Bill 2025 is proposed to be effective from April 1, 2026, and will include 536 sections, which are spread over 23 chapters and 16 schedules. The Income Tax Act, 1961 and Income Tax Bill are under quick observation of 2025 structure:
| Description | Income tax act 1961 | Income tax bill 2025 |
|---|---|---|
| Effective date | Currently applicable | Expected effective date: April 1, 2026 |
| Not of classes | 1 to 298 (819 effective section) | 1 to 536 |
| None of the chapter | Chapter I to XXIII | Chapter I to XXIII |
| Schedules | I for xiv | I for xvi |
| Pages | 823 page | 622 page |
In addition, compared to the Income Tax Act, 1961, an important attempt has been made to remove provisions, clarifications contained in classes and wherever necessary, tables have been inserted to make it more clear and more. For example, the “agricultural land” inherent in the current Act was quite complex because it was in a para format. Now under the new Income Tax Bill, an attempt has been made to make some part of the word, to make, to make. It is easy to understand the meaning of “agricultural land”.
In addition, the word ‘despite’ the word ‘has been removed from the Act. To make it easier to understand, it has been replaced with ‘despite’ under the new Income Tax Bill 2025.
2. ‘Tax Year’ has changed the concept of ‘evaluation year’ /’last year’
The term ‘tax year’ is defined under Section 3 of the Income Tax Bill 2025, which means a 12 -month period of the financial year starting on 1 April. Further, in the case of a business / profession, or a source, or a source of the income that comes into existence in any financial year, will be the period starting with the tax year (A) (A) of such a business or profession Date of installation; Or (B) The date on which such a source of income comes into a new existence, and in both cases ends with the said financial year.
In the new Income Tax Bill 2025, the word ‘Tax Year’ has changed conditions like ‘Assessment Year’ or ‘last year’ under the Income Tax Act, 1961, which was misunderstood by taxpayers in many cases.
3. No notable changes in tax rates
It is noteworthy that no change has been proposed in the Income Tax Bill 2025 regarding the tax rate structure. The attention of the Income Tax Bill 2025 is to streamline the framework of Income Tax Rules to make it a user friendly and clear.
4. No concrete changes in residential condition
With respect to residential status determination, there is no concrete change in the provision as per the new Income Tax Bill 2025.
– In the new bill, the determination of residential status is also rooted in section 6 and is rebuilt without any change in meaning.
-Prodes have been rebuilt: For example, Residency U/S6 (1A) of the Income Tax Act 1961 is now contained in Section 6 (7) of the Income Tax Bill 2025.
In addition, there is no concrete change in the determination of the residential status in terms of other evaluators such as companies, HUFS, etc., which are contained in Section 6 of the Income Tax Bill 2025.
– Only the change ‘last year’ has been replaced with ‘tax year’.
5. No changes in the heads of income
Currently under the Income Tax Act, the income charged for tax has been classified under five separate heads of income charged income. It was expected that there could be some changes in the heads of income. However, on the observation of the Income Tax Bill, it is noteworthy that no changes have been made in relation to the heads of income and it has been retained as:
– Salary
– Income from home property
– Profit and profit of business or profession
– capital gains
– Income from other sources
6. Separate rules to be determined under Income Tax Bill 2025
Currently, the provisions of the Income Tax Act, 1961 are to be read with ITR in many cases. For example, Rule 8D of ITR provided for calculating the expenditure (which is disregarded) in relation to exemption provided in Section 14A of ITA. In addition, there are some assessment rules prescribed under Rule 11UA for assessment of property (including shares of listed, unlisted companies). Rules are also determined in relation to the evaluation of followers, etc. under the current ITR.
According to the Income Tax Bill 2025, in many cases, it has been mentioned that the rules will be determined under the Income Tax Bill 2025. Further, Section 2 (80) defines the “prescribed” determined by the rules made under this Act. As determined by the rules prescribed under this Act. In this way, we need to wait separately for the rules under the new Income Tax Bill 2025, which will provide more clarity on operating aspects, such as disorganized assessment, discount income, evaluation rules, etc. Rejection.
7. Section 10 of the Income Tax Act, 1961, now separately covered in Schedule II for Schedule VII of the bill separately.
Section 10 of the Income Tax Act, 1961, which has been provided for some income exemption such as agricultural income, part of profit from participation firm, family pension, scholarship, NRE / FCNR deposit, small migration exemption, etc. In a tabular format, the Income Tax bill is covered separately in Schedule II to schedule the VII of 2025. This presentation in the bill makes it easy for the common man to determine whether there is any specific income exemption to determine to refer to the specific schedule applied in their case.
8. Provisions of TDS and TCS Pragability are consolidated in a tabular manner
Under the current Income Tax Act, 1961, there are many sections like 194A (interest), 194i (rent), 194J (professional fee, fee for technical services, royalty payment), 194H (commission), 194C (contract), etc. ,
Under the new Income Tax Bill 2025, the issue of overlapping of TDS and almost equal provisions was addressed in a brief and tabular manner under Section 393 of ITB and was addressed by covering TDS provisions (except salary). Apart from this, the provisions of TDS have been included in Section 392 of the new bill on the salary contained in Section 192 of the current Act. Similarly, the provisions of TCs contained in Section 206C of the Act have been covered in a tabular manner in Section 394 of the bill for ease in context. This is a welcome step and will make TDS / TCS easy to understand and help in better compliance, avoid tax leakage and ensure administrative ease.
9. Provision to curb tax on payment to non-residents
“Income Tax Act, 1961, (under the benefits available under DTAA). Due to Income Tax Bill 2025, it is noteworthy that similar provisions have been covered in Section 207 of the bill, in which the tax rates are ease in context For the tabulation has been done and no concrete changes in the forward rate structure are proposed.
