New Income Tax Bill 2025- Key Highlights 

New Income Tax Bill 2025 - Key Highlights and Comparison with Explanation

Simplification and Modernization

• Income-Tax Act, 1961: The existing law spans over 823 pages.

• Income-Tax Bill, 2025: The new bill condenses the law to 622 pages.

• Explanation: Eliminating outdated sections, this streamlining aims to reduce legal disputes and foster voluntary compliance among taxpayers.

Introduction of the 'Tax Year' Concept

• Income-Tax Act, 1961: Utilizes the term 'Previous year' for tax assessments.

• Income-Tax Bill, 2025: Replaces 'Previous year' with 'Tax year.'

• Explanation: This change aims to simplify the tax filing process for individuals and businesses and align terminology with global practices.

Tax Compliance and Filing

• Income-Tax Act, 1961: Taxpayers are required to file annual income tax returns, with various forms depending on income sources and amounts.

• Income-Tax Bill, 2025: The new bill proposes simplified return forms and introduces pre-filled returns to ease the filing process for salaried individuals.

• Explanation: Simplifying the filing process and providing pre-filled returns aim to reduce the compliance burden on taxpayers and encourage timely filing.

Charter

• Income-Tax Act, 1961: No formal charter outlining taxpayer rights and obligations.

• Income-Tax Bill, 2025: Proposes a Taxpayer's Charter, detailing the rights and obligations of taxpayers to build trust between tax authorities and the public.

• Explanation: Aims to ensure a fair and transparent tax administration.

Standard Deduction

• Income-Tax Act, 1961: ₹50,000 for salaried employees and pensioners.

• Income-Tax Bill, 2025: Increased to ₹75,000 in the new regime.

• Explanation: Aims to compensate for the removal of other deductions, offering relief to salaried individuals.

Presumptive Taxation Scheme

• Income-Tax Act, 1961: Turnover up to ₹2 crore (Transaction with online mode >95%).

• Income-Tax Bill, 2025: Turnover limit increased to ₹3 crore.

• Explanation: Encourages small businesses to adopt digital transactions by offering a lower presumptive income rate and expanding eligibility.

Presumptive Taxation for Professions

• Income-Tax Act, 1961: Gross receipts up to ₹50 lakh.

• Income-Tax Bill, 2025: Increases the gross receipts limit to ₹75 lakh (Transaction with online mode >95%).

• Explanation: Broadens the applicability of presumptive taxation to include more professionals, simplifying tax compliance.

Audit of Accounts (for businesses)

• Income-Tax Act, 1961: Turnover exceeding ₹1 crore.

• Income-Tax Bill, 2025: Turnover exceeding ₹10 crore (Transaction with online mode >95%).

• Explanation: Encourages digital transactions and reduces compliance requirements for entities primarily conducting business through banking channels.