The Indian government is likely to table the much anticipated New Income Tax Bill in Parliament on Thursday (Feb 13). The proposed legislation spans over 600 pages, proposing the new legislation as the Income Tax Act, 2025. 

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Once the bill is passed, it will come into effect from April 1, 2026.

The bill is meant to simplify the language of the tax laws and it would later be sent to Parliament's Standing Committee on Finance. It will not change the existing tax slabs or review the tax rebates given.

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Aim of bringing new tax bill

The government has already made it clear that the bill will focus on simplifying tax laws, removing ambiguities, and ensuring ease of compliance for taxpayers rather than introducing any new taxes.

Several amendments are expected to be introduced to the existing law, with a focus on reducing litigation. One of the provisions could include a reduction in penalties for certain offences, making the tax framework less punitive and more taxpayer-friendly.

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Union Budget 2025 

Finance Minister Nirmala Sitharaman on Feb 1 introduced significant changes to the income tax regime in the Union Budget for the financial year 2025-26. 

The government has revised personal income tax rates for taxpayers to encourage spending. Previously, under the 2020 tax system, annual earnings of up to Rs 15 lakh were taxed at rates between 5 and 20 per cent, while those exceeding Rs 15 lakh faced a 30 per cent tax.

However, with the new tax slabs, Sitharaman has announced that individuals earning up to Rs 12 lakh annually will no longer be taxed.

(With inputs from agencies)