New Income Tax Bill 2025 Brings Major Clarifications, Tax Relief for Homeowners

The New Income Tax Bill, 2025, which brought about important improvements to improve transparency and equity for individual taxpayers, was adopted by the Lok Sabha on August 11.  When this new legislation is passed, it will take the place of the existing Income Tax Act of 1961 and go into force on April 1, 2026.

The purpose of the bill is to abbreviate, rationalise, and simplify the current Income Tax Act of 1961. Additionally, it gives income tax officers more authority, enabling them to forcibly access assessees' personal emails and social media accounts when conducting search operations.  Despite the opposition's loud complaints against the particular, intense revision of Bihar's electoral registers, the amended Bill was enacted.

Refunds for Belated Returns

A longstanding concern among taxpayers has been whether they would be eligible for refunds if they filed their returns after the due dates—usually July 31, or September 15 in extended timelines. The original version of the Bill seemed to disallow such refunds, confusing. The revised Bill now ensures that refunds will continue to be permitted, even for belated filings.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Clearer Rules for House Property Deductions

Another key update addresses deductions related to income from house property. Previously, there was ambiguity over how to calculate the 30% standard deduction—specifically, whether municipal taxes should be subtracted before applying the deduction. The updated Bill resolves this by stating clearly that the 30% deduction applies to the annual value net of municipal taxes. This clarification brings fairness and avoids interpretational disputes.

Effective Transition from Old Regime

The New Income Tax Bill will not become law immediately. Instead, it will be implemented from April 1, 2026, replacing the tax framework that has been in place since April 1, 1962. This gives taxpayers, financial professionals, and institutions ample time to prepare for the legal and procedural changes ahead.

Conclusion

Important clarifications and modifications are introduced in the New Income Tax Bill, 2025, with the goal of streamlining the taxing process and giving taxpayers more information. It resolves major issues for people and property owners by reintroducing reimbursements for late filings and making the calculation of deductions connected to real estate clearer. Its gradual implementation, which starts in April 2026, guarantees a more seamless departure from the long-standing system.