The new Income Tax Bill is expected to be presented in Parliament on Thursday. Finance Minister Nirmala Sitharaman had announced this reform in her February 2025 Budget speech. The bill aims to replace the Income Tax Act, 1961, making tax laws simpler and more structured. The Union Cabinet has already approved it. The bill, set to be introduced in the Lok Sabha, consists of 536 sections and 23 chapters, spanning 622 pages.
Key Changes in the New Bill
- The term “Previous Year” (FY) will now be referred to as “Tax Year”, eliminating the Assessment Year (AY) concept.
- Currently, income tax is paid in the following assessment year, but the new law simplifies the process by introducing a direct tax year system.
- The number of sections has increased from 298 in the 1961 Act to 536, while schedules have been expanded from 14 to 16.
- Despite these additions, the total number of chapters remains 23, and the page count is reduced to 622, making it almost half the size of the existing law.
The 1961 Act initially had 880 pages, but multiple amendments over the years made it increasingly complex. The new bill aims to provide a more transparent and efficient tax framework.
