Simplified Income Tax Bill, 2025: A Modern Approach to Tax Legislation

The new Income Tax Bill, 2025, aims to replace the outdated 1961 Act with a streamlined version, reducing sections and making tax calculation easier. Introduced by Finance Minister Nirmala Sitharaman, the Bill is set to take effect from April 2026, pending parliamentary approval.

In a significant overhaul of India's tax legislation, the Finance Minister Nirmala Sitharaman has tabled the Income Tax Bill, 2025, in the Lok Sabha on February 13. Aimed at replacing the cumbersome Income Tax Act of 1961, the new Bill offers a streamlined approach to tax regulation.

This Bill, which will come into effect from April 1, 2026, after necessary approvals, reduces the word count to 2.6 lakh from the previous 5.12 lakh and the number of sections to 536 from 819. It introduces a simplified language with fewer provisos and explanations, making it more accessible to taxpayers.

Among its features are the use of tables and formulae for easier tax calculation, and a new 'tax year' concept aiming to simplify assessments. The Bill also omits outdated sections and replaces the term 'notwithstanding' with 'irrespective', enhancing clarity.

(With inputs from agencies.)