BREAKING: New Income Tax Bill Tabled in Lok Sabha | What Taxpayers Need to Know

New Delhi: The government on Thursday tabled the New Income Tax Bill, 2025, in the Lok Sabha, aiming to replace the decades-old Income Tax Act, 1961, with a more streamlined and modern tax framework. Finance Minister Nirmala Sitharaman , while presenting the bill, requested the Lok Sabha Speaker to nominate members for a parliamentary standing committee that will review the proposed changes in detail.  

The new bill introduces simplified language, updated terminologies, and structural changes to make tax compliance easier for individuals, businesses, and non-profits. It also seeks to clarify tax rules on digital assets, exemptions, and global income while maintaining core taxation principles.  

What You Need to Know  

• Simplified tax terminology: The bill replaces outdated terms. The term ‘tax year’ will now replace ‘financial year’ and ‘assessment year,’ reducing confusion among taxpayers.  
• Global income rules unchanged, but clearer: The bill retains the rule that Indian residents will be taxed on their global income, while non-residents will be taxed only on income earned in India. However, it now explicitly defines deemed income, bringing transparency for foreign taxpayers.  
• Revised deductions and exemptions: Under previous laws, deductions were scattered across multiple sections. The new bill consolidates exemptions and deductions under clauses 11 to 154, bringing clearer rules for investments, donations, startups, and renewable energy. 
• Capital gains tax updated: The bill retains the short-term and long-term capital gains structure but introduces clear provisions for virtual digital assets (VDAs), including cryptocurrency, and modifies tax rates to ensure uniformity. 
• New compliance rules for non-profits: Earlier, tax exemptions for charitable organisations lacked strict compliance guidelines. The new bill lays down a detailed framework under clauses 332 to 355, defining taxable income, commercial activity limits, and compliance rules.  

The government believes the proposed law will simplify tax compliance while ensuring fairness across all taxpayer categories. The bill is now expected to undergo detailed scrutiny in Parliament before final approval.

(Inputs from ANI)