No AY, FY! Income Tax Bill simplifies tax year terminology
What's the story
The Indian government will introduce the new Income Tax Bill 2025 in the Lok Sabha on February 13.
The new legislation seeks to simplify and modernize the current tax system by replacing some terms and concepts from the original Income Tax Act, 1961.
The bill has 536 sections across 23 chapters and runs into 622 pages in total.
Terminology change
Bill replaces 'previous year' with 'tax year'
The new Income Tax Bill 2025 also proposes to replace the term 'previous year' with 'tax year,' and do away with the concept of 'assessment year.'
This is aimed at simplifying the process of taxation by making it more in line with the financial calendar.
As Vivek Jalan, Partner at Tax Connect Advisory, explained, "Tax year has been defined as the 12 months period of the financial year commencing on April 1."
Bill expansion
New I-T Bill 2025 expands sections, reduces pages
The proposed I-T Bill 2025 has more sections than its predecessor, increasing from 298 to 536.
However, it has managed to reduce the total page count from 880 in the older Act to a more manageable 622.
The number of schedules in the existing law will also increase from 14 to 16 under the new legislation.
Despite these changes, the number of chapters remains unchanged at 23.
Enhanced authority
CBDT gains more power under new I-T Bill
Under the new I-T Bill 2025, the Central Board of Direct Taxes (CBDT) will have more power.
According to Clause 533, the CBDT can now formulate tax administration rules, implement compliance measures, and enforce digital tax monitoring systems without frequent amendments to the law.
This is expected to speed up procedural matters and make tax governance more dynamic by reducing bureaucratic delays.
Stakeholder involvement
Public input sought for new I-T Bill
The government has invited public feedback on the new I-T Bill 2025 in four areas: simplification of language, litigation reduction, compliance reduction, and removal of redundant/obsolete provisions.
The Income Tax Department has received over 6,500 suggestions from stakeholders during its review of the Income Tax Act.
These inputs are likely to play a key role in shaping the final version of the bill.