Lok Sabha Passes Revised Income Tax Bill, 2025

Context:

The Lok Sabha has passed the Income Tax (No. 2) Bill, 2025, replacing the Income Tax Act, 1961, with a shorter and more simplified law, while expanding powers of tax officials in search operations.

Income Tax Bill, 2025

Objective of the Bill

Simplify, rationalise, and shorten the Income Tax Act, 1961.
Incorporates recommendations of the Select Committee chaired by Baijayant Panda.

Key features:

Volume Reduction: Sections cut from 819 ? 536; chapters from 47 ? 23; removal of 283 sections and 24 chapters.
Language Simplification: Introduces “tax year” instead of ‘financial year’ and ‘assessment year’.
Clear Tax Framework: Defines taxable income, compliance rules, and restrictions on certain activities.
Virtual Digital Assets: Statutory definition for cryptocurrencies, NFTs, etc., with specific taxation provisions.
Tax Slabs: No change; existing slabs and rebates retained for continuity.
Redundant Provisions Removed: Outdated laws like Fringe Benefit Tax
Taxpayer’s Charter: Lists rights and responsibilities to enhance transparency.
ADR Mechanism: Provides alternate dispute resolution for quicker settlements.
Presentation: Use of 57 tables and 46 formulae for clarity.
Policy Impact: Aligns with Ease of Doing Business, supports digital economy taxation, and maintains revenue stability.