The New Income Tax Bill — to be called the Income-Tax Act, 2025, once passed – is set to be presented in Parliament on February 13, and aims to replace the six-decade-old Income Tax Act of 1961. It will extend to the whole of India and shall come into force on the 1st April, 2026.
The Bill aims to simplify and modernize India’s tax structure, making compliance easier for taxpayers while ensuring a fair and transparent system.
“Looking at the space occupied by the New Income Tax Bill, which is spread over 622 pages against the existing Income Tax Act which runs into 1647 pages, is itself a sign of attempt towards simplucation,” said Balwant Jain, a tax and investment expert.
The new bill runs into 536 sections against 298 existing sections. “It seems complicated provisions have been broken into small and simple sections for easy interpretation and implementation. Against the existing 52 chapters, the bill has only 23 chapters, indicating that redundant chapters have been removed and cohesive matters have been clubbed together to make them simple,” added Jain.
Moreover, the language used in the bill is simple compared to the existing Act which sometimes becomes difficult to understand and is open to different interpretations. The simple language of the bill will help reduce tax litigation, benefiting both the taxpayers and the tax department equally.
(1) For the purposes of this Act, “tax year” means the twelve months period of the financial year commencing on the 1st April.
(2) In the case of a business or profession newly set up, or a source of income newly coming into existence in any financial year, the tax year shall be the period beginning with—
(a) the date of setting up of such business or profession; or
(b) the date on which such source of income newly comes into existence, and, ending with the said financial year.
* Income-tax for any tax year shall be charged as per the provisions of this Act at the rate or rates which are enacted by a Central Act for such tax year.
* The charge of income-tax under sub-section (1) shall be on the total income of the tax year of every person as per the provisions of this Act.
* Income-tax shall also include any additional income-tax, by whatever name called, levied under this Act.
* If this Act provides that income-tax is to be charged in respect of income of a period other than the tax year, it shall be charged accordingly.
* For the income chargeable under sub-section (2), income-tax shall be deducted or collected at source or paid in advance as provided under this Act.
(1) Subject to the provisions of this Act, the total income of any tax year of a person, who is a resident, includes all income from whatever source derived, which—
(a) is received or deemed to be received in India in that year by or on behalf of the person; or
(b) accrues or arises, or is deemed to accrue or arise, to the person in India in that year; or
(c) accrues or arises to the person outside India in that year, but when such person is “not ordinarily resident” in India under section 6(13), it shall be included only when it is derived from a business controlled in or a profession set up in India.
(2) Subject to the provisions of this Act, the total income of a tax year of a person, who is a non-resident, includes all income from whatever source derived, which––
(a) is received or deemed to be received in India in that year by or on behalf of the person; or
(b) accrues or arises, or is deemed to accrue or arise, to the person in India in that year.
(3) Income accruing or arising outside India shall not be deemed to be received in India under this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.
(4) If an income has been included in a person’s total income on the basis that it––
(a) has accrued or arisen; or
(b) is deemed to have accrued or arisen, to the person, it shall not again be included on the basis that it is received or deemed to be received by the person in India.
(1) The annual value of property consisting of any buildings or lands appurtenant thereto, owned by the assessee shall be chargeable to income-tax under the head “Income from house property”.
(2) The provisions of sub-section (1) shall not apply to such portions of the property, as occupied by the assessee for his business or profession, the profits of which are chargeable to income-tax.
(1) The amount of arrears of rent received from a tenant or the unrealised rent realised subsequently from a tenant shall deemed to be the income from house property in respect of the tax year in which such rent is received or realised.
(2) The amount deemed to be income from house property under sub-section (1) shall be included in the total income of the assessee under the head “Income from house property”, whether the assessee is the owner of the property or not in that tax year.
(3) A sum equal to 30% of the arrears of rent or the unrealised rent referred to in sub-section (1) shall be allowed as deduction.