The parliamentary panel's report on the New Income Tax Bill 2025 is set to be tabled in the Lok Sabha on Monday, July 21, 2025. This bill aims to replace the Income Tax Act of 1961 with a modernized and simplified tax law.

Key Objectives and Changes

The primary goals of the Income Tax Bill 2025 are to simplify the language of tax laws, eliminate outdated and redundant provisions, and reduce litigation. The bill consolidates the content of the existing Income Tax Act, 1961, which consists of 52 chapters across 823 pages, into 23 chapters and 16 schedules spanning 622 pages. The government aims to implement the new Income Tax law from April 1, 2026.

Some of the key proposed changes include:

• Unified Tax Year: The bill introduces a standardized 'Tax Year,' a 12-month period replacing the dual financial year (April to March) and assessment year system. This change is particularly beneficial for new businesses or professionals, as their tax year will commence from the date they establish their business or profession or the date they generate a new source of income.
• Presumptive Taxation: The bill introduces the concept of 'Profit claimed to have been actually earned' while computing business income. Section 58 of the Income Tax Bill 2025, which covers the presumptive taxation scheme, applies to resident individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) engaged in any business other than plying, hiring, or leasing goods carriages. Professionals like doctors, lawyers, and architects can also avail of the scheme.
• New vs. Old Tax Regime: The new tax regime will continue to serve as the default system; however, the Income Tax Bill 2025 retains the old tax regime, providing taxpayers with the option to choose between the two. Under the new tax regime, no income tax will be payable on income up to INR 1.2 million (excluding special rate income such as capital gains). For salaried taxpayers, this limit increases to INR 1.275 million due to the INR 75,000 standard deduction introduced in the Union Budget 2025.
• Virtual Digital Assets: The Bill expands the definition of undisclosed income to include virtual digital assets, encompassing any cryptographically generated code, number, or token that provides a digital representation of value exchanged.
• Power to Frame Schemes: The bill empowers the central government to frame new schemes for greater efficiency, transparency, and accountability, potentially eliminating interface with the assessee through technology and optimizing resource utilization.
• Digital Tax Monitoring: The bill delegates more powers to the Central Board of Direct Taxes (CBDT), enabling it to implement tax schemes independently and enhance digital tax monitoring without frequent legislative amendments.

Parliamentary Panel's Suggestions

The Select Committee of Parliament, chaired by BJP leader Baijayant Panda, has finalized its report on the Income Tax Bill-2025 with approximately 285 suggestions for changes to the legislation. The panel has proposed changes to the language of the bill. After the report is submitted, the government will consider the recommendations and, if required, seek approval from the Cabinet before moving the bill for consideration and passage in the Lok Sabha.

Impact and Reception

The Income Tax Bill 2025 aims to create a more efficient and transparent tax regime, benefiting both individuals and businesses. The bill intends to simplify tax processes, reduce litigation, and enhance clarity. The new bill empowers the CBDT to introduce schemes independently, reducing bureaucratic delays and making tax governance more efficient. The CBDT will have the authority to establish tax administration rules, implement compliance measures, and enforce digital tax monitoring systems without requiring frequent legislative amendments.