Key Proposals
New Income Tax Bill to give greater powers to Central Board of Direct Taxes
This story was originally published at 15:12 IST on 12 February 2025
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NEW DELHI – The proposed Income Tax Bill 2025 will give greater autonomy and powers to the income tax department and government to bring about procedural changes and amnesty schemes for taxpayers. The copy of the bill circulated to the lawmakers says the Central Board of Direct Taxes may, subject to the control of the Central Government, by notification, make rules for carrying out the purposes of the Act.
The bill also stipulates that "the Central Government may, by notification, make a scheme for any of the purposes of this Act, so as to impart greater efficiency, transparency and accountability,". The government, however, will have to lay these notifications before each House of the Parliament after issuing them.
"A key departure from the Income-Tax Act, 1961, is that previously, the Income Tax Department had to approach Parliament for various procedural matters, tax schemes, and compliance frameworks. Now, the Central Board of Direct Taxes has been empowered to introduce such schemes independently, significantly reducing bureaucratic delays and making tax governance more dynamic," AMRG & Associates Senior Partner Rajat Mohan said.
The new bill also proposes to replace 'assessment year' and 'previous year' with 'tax year', making the language easier for taxpayers. "For the purposes of this Act, 'tax year' means the twelve months period of the financial year commencing on the 1st April." The use of the phrase 'assessment year', which refers to the year following the one for which tax is being paid, caused confusion among taxpayers, especially new ones.
The Income Tax Bill 2025 has 536 sections and 23 chapters, spread across 622 pages. This is 201 pages fewer than the current law. The document has been shortened in length primarily by removing explanations.
"I do not expect any additional tax burden to be cast upon taxpayers through the new tax bill," Munjal Almoula, head of tax at BDO India said.
The new bill is likely to be tabled in the Lok Sabha on Thursday. According to government officials, the bill will be referred to the Parliamentary Standing Committee on Finance. Led by Bharatiya Janata Party lawmaker Bhartruhari Mahtab, the committee consists of 31 members--21 from the Lok Sabha and 10 from the Rajya Sabha--and counts former finance minister P. Chidambaram among them. The committee examines matters related to the Ministry of Finance and the Ministry of Corporate Affairs, NITI Aayog, and the Ministry of Statistics and Programme Implementation.
Under the new bill, taxpayers will also need to report their crypto transactions. "Any person, being a reporting entity, as prescribed, in respect of a crypto-asset, shall furnish information in respect of a transaction of such crypto-asset in a statement," the bill said.
Announced in the full Budget for 2024-25 (Apr-Mar), the new Income Tax Bill aims to simplify the Income Tax Act, 1961, and make it simpler, more lucid and easier for taxpayers to calculate taxes and file returns. Following the announcement, the Central Board of Direct Taxes had set up an internal committee in October to carry out a comprehensive review of the Income Tax Act.
"The new bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation," Finance Minister Nirmala Sitharaman said on Feb. 1 presenting the Budget for FY26. End
Reported by Sagar Sen
Edited by Saji George Titus
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