New Delhi. In Budget 2025, Finance Minister Nirmala Sitharaman had talked about introducing a new Income Tax Bill in Parliament. This bill has also got the approval of the Cabinet. Now it can be introduced in Parliament at any time. The draft of the new Income Tax Bill has also come out now.
The language of this 622-page draft is easier than the current Income Tax Act, 1961. The current Income Tax Act has a total of 880 pages. However, the chapter number in the draft of the new bill has been kept as it is 23. In the draft, only ‘Tax Year’ has been provided in place of the currently prevalent Assessment Year. Now the entire 12 months of the financial year will be called Tax Year, while the term Assessment Year will not be used. In the new bill, tax rules on Virtual Digital Assets (VDA) have been tightened. This Act will be known as the Income Tax Act, 2025. It is expected to come into effect from April 1, 2026.
The draft provides clarity on everything from standard deduction to capital gains tax. There is no change in the period of short term capital gains for the stock market in the draft. Under section 101 (b), a period of up to 12 months will be considered as short term capital gains. Apart from this, its rates have also been kept the same. Short term capital gains tax has been retained at 20 percent. A major change in the New Income Tax Bill is related to the Central Board of Direct Taxes i.e. CBDT. According to the bill draft, earlier the Income Tax Department had to contact the Parliament to start various tax schemes, but according to the New Tax Act 2025, now CBDT will be able to start such schemes independently.
New definition of ‘tax year’
In the new income tax bill, ‘tax year’ has been defined as a period of 12 months starting from 1 April. However, in case of a new business or profession, the tax year will start from the day it is established and end with the financial year. That is, now tax will be levied on the basis of economic activities and income earned in the tax year. According to experts, this change can make the tax reporting system more seamless in future. The word assessee has not been used in the draft of the new income tax bill.
Stringent provisions on virtual digital assets:
Now virtual digital assets (VDA) have also been included in the raid and calculation of undeclared assets. Earlier only cash, bullion, jewellery etc. were counted in it. Apart from this, explanations and provisions have been removed to simplify the law. New sections related to revenue recognition and inventory valuation have been added for service contracts. Deductions from salary such as standard deduction, gratuity, leave encashment etc. have been compiled at one place, so that they are not scattered in different sections.
There can be more changes.
Keep in mind that this is just a bill. This bill will be presented in the House this week or next week. Along with its presentation, it will be sent to the Standing Committee. There will be consultation on it. In such a situation, many changes can be made in it. Based on the changes that will be made on the basis of the Standing Committee’s recommendation, this bill will be placed in the Parliament. In such a situation, many things can change in it, we cannot deny the possibility of this.
Related Articles:-
AADHAAR: UIDAI has prescribed certain terms and limits for updating various details
