New Income Tax Bill 2025: What are expected changes and how will they affect you?
The government is expected to introduce the Income Tax Bill 2025 on February 13, aiming to simplify tax laws and enhance compliance.
The central government may table the new Income Tax Bill 2025 in Parliament on February 13. The bill aims to simplify tax laws and modernise compliance structures. It also aims to make it easier for taxpayers to understand the rules and regulations even without the help of professionals.
The new bill concerning income tax consists of 23 chapters, 16 schedules and 536 clauses covering a wide range of tax provisions.
What might change?
Among the key proposed changes if the use of simpler terminology. The bill proposes to replace the term ‘Financial Year’ with the term ‘Tax Year’ and do away with the term ‘Previous Year’. The term ‘Tax Year’ then will represent the 12-month period starting from April 1, aligning it with the financial year framework.
At present, income earned in the financial year 2024-25 is assessed in the next financial year, which in this case will be assessment year 2025-26.
In the case of a newly set-up business or profession, the tax year shall be the period beginning with the date of setting up of such business or profession. In the case of a new source of income coming into existence in the middle of a financial year, the tax year will begin from the date on which such a source of income comes into existence. In both cases, the tax year will end when the financial year ends.
The bill also proposes to count virtual digital assets uncovered during searches as ‘undisclosed income’. The term currently includes categories of money, bullion and jewellery.
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The new law also proposes to allow Central Board of Direct Taxes to establish tax administration rules, implement compliance measures and enforce digital monitoring systems without the need for frequent legislative changes.
Filing deadlines
The new bill has kept the existing income tax return filing dates unchanged. Individuals and other taxpayers who are not required to have their accounts audited must submit their original ITR by July 31 of the assessment year. For those taxpayers whose accounts are subject to audit, the report must be submitted by September 30. Following this, taxpayers must file their ITR by October 31.
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Taxpayers dealing in international transactions are required to submit their audit reports by October 31 and file ITR by November 30. If an individual misses the initial deadline for filing their ITR or wish to file a revised return due to errors, they have the option to submit a belated or revised return by December 31.
An individual may incur a penalty of up to ₹5,000 for filing a late return as stipulated in Section 234F of the Income Tax Act.