Union Finance Minister Nirmala Sitharaman introduced the much-anticipated Income Tax Bill 2025 in the Parliament today. The new Income Tax Bill, 2025 comes as a revolutionary change towards India’s existing Income Tax system and statutory provisions, repealing the age-old Income Tax Act, 1961 to better fit the advancements and economic realities of the 21st Century.
The Income Tax Bill being a money Bill is required to be tabled and presented over the Lok Sabha, presided over by Speaker Om Birla.
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The proposed bill consists of 536 sections and 16 schedules and aims to implement numerous structural reforms to the legislation and its implementation. Some of the key features of the new Bill consist of simplified legal language, redefined ‘tax residency’ rules and enhanced clarity on taxation policies for concerned individuals and businesses.
Read More: List of Sections in the New proposed Income Tax Act, 2025
The Bill is expected to streamline taxation, while increasing transparency and reducing litigation limbo. One of the major changes in the bill is the replacement of “Previous Year” with “Tax Year”, aligning India’s tax terminology with global practices.
Read More: Income Tax Bill 2025 Proposes Replacing ‘Previous Year’ with ‘Tax Year
Trumping all other changes, the most significant and discussed change is the effective removal of Income Tax on salaried individuals having an annual income of up to Rs. 12 Lakh under the new regime, due to new tax rebate schemes announced under Section 87A of the existing Act.
The bill also provides a much-needed structured tax framework for online gaming, defining ‘online game’ and revising tax provisions related to gaming winnings. It introduces a net winnings-based tax model, ensuring fairer taxation by considering deductions for entry fees and wagers. The existing 30% tax rate on winnings remains, but the Tax Deducted at Source (TDS) mechanism is modified to apply only to net winnings exceeding Rs. 10,000 per transaction.
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Adopting a “Trust First, Scrutinize Later” approach as stated by the Union Finance Minister Nirmala Sitharaman in her key-note Union Budget presentation on 1 February, 2025, the Bill has been accepted with open arms by many, but was subject to intense discussion and chaotic parley in the Parliament.
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