On Monday, July 21, 2025, a report from the parliamentary committee tasked with examining the new Income Tax Bill, 2025—which would supersede the six-decade-old Income Tax Act—will be presented to the Lok Sabha.
On February 13, Finance Minister Nirmala Sitharaman tabled the revised Income Tax Bill, 2025, in the Lok Sabha. Speaker Om Birla formed the 31-member Select Committee, led by BJP leader Baijayant Panda, to examine the bill.
The Committee’s report on the revised Income Tax Bill, 2025, which was adopted at its July 16 meeting after 285 suggestions, will now be presented to the House for additional action. The goal of the streamlined Income Tax Bill, which is half as large as the 1961 Income Tax Act, is to reduce the amount of litigation and new interpretation in order to establish tax certainty.
The I-T Act’s word count of 5.12 lakh is more than the new bill’s 2.6 lakh, which was introduced in the Lok Sabha. Compared to the current law’s 819 effective sections, there are 536 sections in all.
The frequently asked questions (FAQs) published by the IT department also indicate that the number of chapters has been cut in half, from 47 to 23.
The Income Tax Bill 2025 eliminated 1,200 provisos and 900 explanations, and it contains 57 tables instead of the Act’s 18 tables. The Bill’s exemption and TDS/TCS provisions have been made clearer by being presented in tabular form, and the chapter on non-profit organisations has been made more thorough by using straightforward language. Consequently, the word count has decreased by 34,547.
The Bill substitutes “tax year” for the phrase “previous year” as used in the Income Tax Act of 1961 in an effort to be more taxpayer-friendly. The idea of an assessment year has also been abandoned. Taxes are currently paid in the assessment year (say 2024–25) on income produced in the prior year (say 2023–24). Under the streamlined bill, the concepts of assessment year (AY) and prior year have been eliminated, leaving simply the tax year.
During the Bill’s introduction in the Lok Sabha, Ms. Sitharaman said that “substantial changes” had been made. The section count was cut from 819 to 236, and the word count was cut in half from 5.12 lakh. Once the Bill was introduced, it was sent to the Lok Sabha’s select committee, which was instructed to report by the first day of the following session.