New Income Tax Bill, 2025: Key Changes, No Tax Slab Revisions

The New Income Tax Bill, 2025, which aims to simplify tax laws and improve compliance, is likely to be tabled in Parliament tomorrow, according to media reports. The bill seeks to modernize India’s six-decade-old tax law by streamlining terminologies, broadening tax definitions, and enhancing clarity on various financial aspects. However, officials have clarified that there will be no changes in existing tax brackets.

Key Changes Proposed in the New Income Tax Bill, 2025

According to a CNBC-TV18 report, the new bill will feature 16 schedules and 23 chapters, introducing several key changes:

1. Assessment Year’ to be Replaced by ‘Tax Year:

One of the major changes in the bill is the replacement of the term ‘assessment year’ with ‘tax year’, making it easier for taxpayers to understand their obligations.

Additionally, the bill proposes using ‘previous year’ instead of ‘financial year’, aligning tax terminology with common usage. The ‘tax year’ will still begin on April 1st and last for 12 months, ensuring no changes to the existing taxation period.

2. Broader Definition for Cryptos and Digital Transactions:

The definition of cryptocurrencies and digital transactions is set to expand under the new law. This is expected to reduce ambiguity and provide clearer guidelines on crypto taxation.

3. Clearer Guidelines on Dividend Taxation:

The bill includes specific mentions of ‘finance units’ and ‘finance companies’ under dividend taxation, ensuring a more structured approach to dividend income classification.

4. Introduction of a ‘Taxpayer’s Charter’:

A new section titled ‘Taxpayer’s Charter’ is being introduced to define taxpayer rights and obligations more clearly, aiming to enhance transparency and fairness in tax administration.

5. Foreign Companies to Be Deemed as Residents:

The bill proposes that foreign companies could be deemed as residents, likely to impact multinational corporations operating in India. This change aims to bring more global companies under India’s tax jurisdiction and prevent tax avoidance.

No Changes in Capital Gains Tax & Existing Tax Brackets

A CNBC-Awaaz report confirmed that the new Income Tax Bill will not alter short-term capital gains (STCG) and long-term capital gains (LTCG) tax structures.

Short-term capital gains (STCG) from equity, funds, and business trust units like REITs and InvITs will continue to be taxed at 20%.

There are no revisions to the existing income tax slabs, meaning taxpayers will continue to be taxed under the same rates as before.

Public and Industry Reactions to the New Income Tax Bill

The Income Tax Department received nearly 7,000 suggestions for reviewing the outdated tax law. Experts and industry leaders have welcomed the move, citing that a simplified tax structure will make compliance easier and improve transparency.

While the bill aims to modernize tax administration, many analysts believe the lack of changes in tax slabs or exemptions could be a missed opportunity.

Conclusion: A Step Towards Simplified Taxation

The New Income Tax Bill, 2025 brings significant terminology updates, broader tax definitions, and a taxpayer’s charter, improving ease of compliance. However, since there are no changes in tax brackets or capital gains taxation, the overall tax burden for individuals and businesses remains unchanged.

As the bill is expected to be tabled in Parliament tomorrow, taxpayers, businesses, and financial experts will closely watch how the final legislation shapes up and what it means for India’s economic landscape.