New Income Tax Bill, 2025: Important Key Points Every Taxpayer Must Know

Introduction

The New Income Tax Bill, 2025, set to take effect from April 1, 2026, marks a major shift in India’s taxation system. This bill, with 536 clauses, 16 schedules, and 23 chapters, is a complete overhaul of the existing Income Tax Act, 1961. It introduces modernized tax administration, digital compliance measures, and structural changes that will impact individuals, businesses, and tax professionals.

If you’re wondering what changes this bill brings, how it will affect your tax planning, and what compliance measures you need to take, this article covers all the important key points of the New Income Tax Bill, 2025 in a simple and humanized manner.

1. Introduction of the “Tax Year” Concept

One of the most significant changes in the New Income Tax Bill, 2025 is the replacement of the traditional “Previous Year” and “Assessment Year” concepts with a unified “Tax Year.”

• The tax year will start from April 1 and end on March 31, similar to the financial year.
• This change aims to simplify tax calculations and remove confusion around different terminologies.
• Taxpayers must now align their income tax filings with this “tax year” for clarity and consistency.

2. Old Tax Regime vs. New Tax Regime

The New Income Tax Bill, 2025 retains both the Old Tax Regime and the New Tax Regime introduced in Budget 2020. Here’s how they are structured:

• Old Tax Regime: Continues with existing deductions and exemptions under Chapter VI-A (Clauses 122 to 154). This means benefits like 80C (Investments), 80D (Medical Insurance), and HRA remain available.
• New Tax Regime: Covered under Clause 202, this remains a lower tax rate structure but with fewer exemptions.
• Taxpayers can still choose between the two regimes, depending on which benefits them more.

This flexibility allows individuals and businesses to plan their income tax savings efficiently under the New Income Tax Bill, 2025.

3. More Powers to CBDT for Efficient Tax Administration

The Central Board of Direct Taxes (CBDT) has been given greater autonomy in implementing tax policies and schemes under the New Income Tax Bill, 2025.

• The CBDT can now introduce new tax compliance measures without requiring frequent parliamentary approvals.
• This change is aimed at reducing bureaucratic delays and making tax administration more responsive to evolving financial and economic conditions.
• It also enables digital tax monitoring, ensuring a transparent and efficient tax system.

4. Key Compliance and Filing Changes

Taxpayers must be aware of the new compliance measures introduced in the New Income Tax Bill, 2025:

• Due dates for filing ITR remain unchanged:
  
  • Individuals: July 31
  • Companies & Tax Audit Cases: October 31
  • Transfer Pricing Cases: November 30
  • Revised Returns: December 31 (or before assessment completion, whichever is earlier)
• Faceless assessments and appeals continue, making the tax process more digital and less dependent on in-person interactions.
• Stricter penalties for late filings and non-compliance to ensure timely tax payments.

Taxpayers must stay updated on compliance to avoid penalties under the New Income Tax Bill, 2025.

5. TDS and TCS Provisions Under the New Law

The New Income Tax Bill, 2025 integrates Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions:

• TDS provisions (Clauses 393): Covers salary, professional fees, rent, and other taxable transactions.
• TCS provisions (Clause 394): Applies to transactions like foreign remittances, selling high-value goods, etc.

Businesses and individuals must continue to comply with TDS/TCS requirements to avoid penalties.

6. Tax Audit Rules and Who Can Conduct Audits

The New Income Tax Bill, 2025 retains the requirement for tax audits under Clause 63, similar to Section 44AB of the existing Act.

• Only Chartered Accountants (CAs) are authorized to conduct tax audits, ensuring quality financial scrutiny.
• The audit threshold limits remain unchanged, requiring businesses with turnover exceeding ₹1 crore (or ₹10 crore for digital transactions) to undergo tax audits.

Maintaining accurate financial records is crucial to comply with the New Income Tax Bill, 2025.

7. Rebate and Exemptions: What Stays the Same?

The rebate currently provided under Section 87A is now covered under Clause 156 in the New Income Tax Bill, 2025.

• Individuals with income up to ₹12 lakh under the New Tax Regime will continue to receive a 100% rebate.
• Deductions under Chapter VI-A (80C, 80D, etc.) remain in the Old Tax Regime.

This means tax-saving options remain intact, allowing flexibility in financial planning.

8. Impact on Digital Transactions and Crypto Taxation

The New Income Tax Bill, 2025 introduces clearer rules for digital transactions and cryptocurrencies:

• Crypto taxation remains at 30% with 1% TDS on transactions.
• Increased monitoring of digital assets, e-commerce earnings, and online business income.
• Stricter compliance for businesses engaged in cross-border digital transactions.

Taxpayers dealing with cryptocurrency and digital income sources must carefully adhere to these new regulations.

9. International Taxation and GAAR Provisions

The New Income Tax Bill, 2025 refines General Anti-Avoidance Rules (GAAR) and international taxation measures:

• Stronger provisions to prevent tax evasion through offshore entities.
• Changes in tax treatment for NRIs and foreign investments.
• Expanded Double Taxation Avoidance Agreement (DTAA) provisions to streamline cross-border taxation.

Non-residents and multinational businesses must adapt to these new compliance standards.

10. Conclusion: How Should Taxpayers Prepare?

The New Income Tax Bill, 2025 brings a modernized, structured, and technology-driven tax system. While it retains many existing provisions, it also introduces significant compliance updates that taxpayers must prepare for.

• Keep financial records updated to meet new compliance requirements.
• Consult tax professionals to choose between the Old and New Tax Regime.
• Stay aware of filing deadlines to avoid penalties.

Understanding the important key points of the New Income Tax Bill, 2025 is essential for individuals and businesses alike. As we approach April 2026, adapting to these changes will be crucial for a smooth transition.