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The new income tax bill, known as the ‘Income Tax Bill 2025’, comprises 600 pages, 23 chapters, 16 schedules, and 536 clauses (to become Sections after the bill is passed).
New Income Tax Bill proposes to replace the words ‘assessment year’ and ‘previous year’ with just one word ‘tax year’.
The new income tax bill, known as the ‘Income Tax Bill 2025’, is proposed to be implemented from April 1, 2026. The bill comprises 600 pages, 23 chapters, 16 schedules, and 536 clauses (to become Sections after the bill is passed), according to sources.
The bill proposes to replace the words ‘assessment year’ and ‘previous year’ with just one word ‘tax year’, the sources said. The tax year would define the 12-month financial period starting from April 1, 2026.
Importantly, no changes in short-term capital gains (STCG) tax duration and rate have been made. The STCG tenure remains 12 months and the rate at 20 per cent, according to the sources.
The existing Income Tax Act, 1961, has a total of 298 Sections. It has been increased to 536 Clauses in the latest I-T bill for better clarity in the language, said the sources.
As per the proposed law, clearer tax treatment on stock options (ESOPs) have been included for reduced tax disputes and includes judicial pronouncements of the last 60 years for more clarity.
AMRG & Associates Senior Partner Rajat Mohan, according to news agency PTI, said, “This increase in sections reflects a more structured approach to tax administration, incorporating modern compliance mechanisms, digital governance, and streamlined provisions for businesses and individuals. The new law introduces 16 schedules and 23 chapters.”
The new law will have higher 16 schedules, compared with 14 schedules currently.
However, the number of chapters have been retained at 23. The number of pages has been reduced substantially to 622, almost half of the current voluminous Act which includes amendments made over the last six decades. When the Income Tax Act, 1961, was brought in, it had 880 pages.
“A key departure from the Income-Tax Act, 1961, is that previously, the Income Tax Department had to approach Parliament for various procedural matters, tax schemes, and compliance frameworks. Now, CBDT has been empowered to introduce such schemes independently, significantly reducing bureaucratic delays and making tax governance more dynamic,” he said.
As per new law, the CBDT can now frame tax administration rules, introduce compliance measures, and enforce digital tax monitoring systems without requiring frequent legislative amendments as per the Clause 533.
Importantly, this is the sixth income tax bill ever in India. The new bill will replace the existing Income Tax Act, 1961. The sources said after the bill is passed, it will called as the ‘Income Tax Act, 2025’.
The bill is likely to be introduced in Parliament on Thursday.
After the introduction in Parliament, the bill will be referred to the standing committee. The committee will hold consultations on the bill and may also recommend changes in it.
Why a New Income Tax Bill?
The existing Income Tax Act, 1961, has undergone numerous amendments over the decades, making it complex and difficult for taxpayers to navigate. The new Income Tax Bill intends to:
– Simplify tax provisions with clearer language
– Reduce legal disputes by removing ambiguities
– Make compliance easier for individuals and businesses
– Promote a trust-based tax system, where scrutiny comes later.
During her Budget Speech 2025, Finance Minister Nirmala Sitharaman said the bill would embody the same philosophy of Nyaya that was at the heart of Bharatiya Nyaya Sanhita. The law had repealed the Indian Penal Code of 1860 from July 2024.
In the Budget Speech, she said, “I am happy to inform this August House and the country that the new income-tax bill will carry forward the same spirit of “Nyaya”. The new bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.”
