Indian govt to introduce new Income Tax Bill 2025 in Parliament - What to expect?
Written By Prapti Upadhayay
Published: Feb 12, 2025, 12:09 IST | Updated: Feb 12, 2025, 12:09 IST
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Business & Economy, India News: The bill consists of 23 chapters, 16 schedules, and 536 clauses, covering a broad spectrum of tax-related provisions. Business & Economy
The central government is expected to present the Income Tax Bill 2025 in Parliament on February 13. This proposed bill seeks to simplify tax laws and modernise compliance frameworks, making regulations more understandable for taxpayers, even without professional assistance.
The bill consists of 23 chapters, 16 schedules, and 536 clauses, covering a broad spectrum of tax-related provisions.
One of the significant proposed changes is the use of more straightforward terminology. The bill suggests replacing ‘Assessment Year’ with ‘Tax Year’ and ‘Previous Year’ with ‘Financial Year’. Under this change, the ‘Tax Year’ would represent the 12-month period beginning on 1 April, aligning it with the financial year framework.
Currently, income earned during the financial year 2024-25 is assessed in the subsequent financial year, referred to as assessment year 2025-26. The new terminology aims to remove confusion and create consistency.
Another important change relates to virtual digital assets. The bill proposes classifying these assets, when discovered during tax searches, as ‘undisclosed income’, similar to how money, bullion, and jewellery are currently treated.
The proposed bill retains the existing deadlines for filing income tax returns (ITR). Individuals and taxpayers who are not required to have their accounts audited must file their original ITR by 31 July of the assessment year.
Taxpayers whose accounts require auditing must submit their audit report by 30 September, followed by their ITR by 31 October. Taxpayers involved in international transactions must submit their audit reports by 31 October and file their ITR by 30 November.
Those who miss the initial deadline or need to correct errors can file a belated or revised return by 31 December. A late ITR submission may result in a penalty of up to ₹5,000 under Section 234F of the Income Tax Act.
The new bill is also expected to revise certain sections of the existing tax law. Currently, income tax return filing falls under Section 139, while the new tax regime is covered under Section 115BAC. To simplify legal language, the bill is likely to introduce renumbered sections, potentially revising references in the Income Tax Act 2025.
(With inputs from agencies)