Direct Tax Advisory
Income Tax Bill 2025: A simplified tax framework
February 18, 2025
The Income Tax Bill 2025, introduced in the Lok Sabha on February 13th, 2025, aims to replace the Income-tax Act, 1961.
The bill focuses on simplifying tax provisions, improving digital compliance, and aligning India’s tax system with global standards. Some key highlights include:- Organized and Simplified Framework: The bill simplifies lengthy sections and provisions, replacing terms like 'assessment' and 'previous year' with the more straightforward 'tax year,' making it easier to understand and in line with global tax practices.
- Simplified TDS and TCS provision: TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions are streamlined, reducing the number of relevant sections.
- Streamlined framework for non-profits organization: Existing provisions for non-profits are consolidated into a single chapter within the Income Tax Bill 2025.
- Changes in Agricultural Taxation: Only core farming activities remain fully exempt, with stricter provisions for allied agricultural activities.
- Assessments and Tax administration – The bill expands the use of faceless assessments and strengthens digital compliance mechanisms.
- Taxation of Digital transactions and cryptocurrency – It introduces expanded and clearer rules for the taxation of digital assets, providing a precise definition of virtual digital assets.
Thus, the Income Tax Bill 2025, represents a significant reform aimed at making tax laws more user-friendly. It simplifies compliance requirements, streamlines income tax provisions, and boosts digital integration, ensuring a transparent, taxpayer-friendly, and modernized tax system, all while preserving the core structure of the tax system.
