Trilegal Partners Highlight Key Features of the New Income Tax Bill, 2025: Simplifying Complexities While Ensuring Continuity

Himanshu Sinha & Aditi Goyal, Partner in the Tax Practice, Trilegal:

The new Income Tax Bill, 2025 (Bill) comprises of 536 clauses and 16 schedules running over 622 pages. However, this lengthiness is largely attributable to an attempt to break-down and split complex provisions with multiple provisos and sub-sections into concise, reader friendly clauses. The Bill incorporates modern financial and technological advancements, and employs simple verbiage while getting rid of redundant provisions and unnecessarily complex wording.

It enhances legal clarity by refining and shortening some of the lengthy, complex provisions – for instance, the tax deduction at source provisions which spanned over 35 plus sections are proposed to be consolidated under only two clauses in the Bill. The Bill offers additional guidance for certain sections that entailed complex scenarios and includes an interpretation section below the relevant provision if the provision requires additional explanation. A key change is the introduction of ‘tax year’ terminology, while doing away with the concept of ‘previous year’ and ‘assessment year’, which was confusing for most taxpayers .

While the attempt to make the law simple to understand is laudatory, a few aspects require consideration. For instance, the definition of income in the new Bill has more than 20 line items. The last line item classifies ‘any other income referred to in section 2(24) of the Income-tax Act, 1961’ as income as well. This would imply that to this extent, the new law would need to be read along with the existing act, which should ideally not be the case given the intent with which the new law has been proposed.

Despite all the changes, the overall scheme and structure of the law in the new Bill remains largely consistent with the extant Income Tax Act, 1961 ensuring continuity of key aspects. While certain issues require more consideration, this balanced approach would maintain familiarity for stakeholders while adapting to contemporary economic realities.