Finance Minister Nirmala Sitharaman is set to introduce the Income-Tax Bill 2025 in the Lok Sabha on February 13. The bill aims to streamline and amend India’s taxation laws.
The official list of business for the parliamentary session on Thursday indicates that Sitharaman will move to introduce the bill to consolidate and update the country’s income tax legislation.
This new bill is designed to replace the 1961 Income Tax Act, which has become increasingly complex over the years due to numerous amendments. Importantly, the bill does not propose new taxes but focuses on simplifying the language and structure of the existing law. The new law is expected to come into effect in April 2026.
Experts anticipate that the bill will remove outdated sections, reduce litigation, and enhance compliance. It aims to make the tax system more transparent, accessible, and taxpayer-friendly. One of the key changes includes replacing terms like "assessment year" and "previous year" with a simplified concept of the "tax year," which will start on April 1. For example, income earned between April 2024 and March 2025 will now be assessed within the same financial year, rather than in the following one as per the current system.