New Income Tax Bill 2025: 23 Chapters and 16 Schedules as part of the New Bill, Say Sources

The new Income Tax Bill would likely propose 23 chapters and 16 schedules, according to sources. It will use simpler terminology like “tax year.”  The tax year will define the twelve-month financial year beginning on April 1, 2026, the sources added.

The government plans to introduce the much-anticipated New Income Tax Bill in Parliament on Thursday (February 13).

The draft legislation covers over 600 pages and intends to replace the Income Tax Act of 1961, which is six decades old.

According to sources, once passed, the new law will be known as the Income Tax Act of 2025.

Experts have long condemned the present Income Tax Act as complicated and burdensome, resulting in judicial challenges. The government understands the need for a more streamlined direct tax law to reduce ambiguity and assure clarity.

Sources said, the bill’s primary goal is to make compliance easier. The new framework will minimize paperwork, connect digital platforms, and simplify return filing procedures, easing the strain on taxpayers.

The government hopes the new law to modernize India’s tax system, making it more efficient and user-friendly.

The bill is anticipated to include broader definitions for digital transactions, electronic record-keeping, and crypto-assets. It also makes particular mentions of “Finance Companies” and “Finance Units” in terms of dividends.

As part of new compliance and procedural improvements, the bill proposes establishing a Taxpayer’s Charter. It also contains a lengthy section recommending that foreign corporations be treated as residents under certain conditions.

The wording in tax legislation is also expected to alter. The phrase “Tax Year” will replace “Assessment Year,” while “Financial Year” will replace “Previous Year.”