The Earnings Tax Invoice 2025, a doc of 622 pages comprising 536 sections and 23 chapters, is anticipated to be launched within the Lok Sabha on Thursday, February 13, 2025.
As soon as enacted, the proposed invoice will exchange the six-decade-old Earnings Tax Act of 1961, which has grow to be more and more advanced and cumbersome attributable to quite a few amendments.
New Earnings Tax Invoice VS Outdated Regime
One of many key adjustments within the new legislation is changing the time period “earlier 12 months” within the Earnings Tax Act, 1961, with “tax 12 months.” Moreover, the idea of an “evaluation 12 months” has been eradicated. At the moment, tax for revenue earned within the earlier 12 months (e.g., 2023-24) is paid within the evaluation 12 months (e.g., 2024-25). The brand new invoice simplifies this construction by introducing a single “tax 12 months.”
The Earnings Tax Invoice, 2025, consists of 536 sections, up from 298 within the current Earnings Tax Act, 1961. The variety of schedules will even enhance from 14 to 16. Nevertheless, the variety of chapters stays unchanged at 23. Regardless of the growth in sections, the general size of the laws has been considerably lowered to 622 pages- virtually half of the present Act, which has accrued amendments over six a long time. For comparability, the unique Earnings Tax Act, 1961, had 880 pages.
AMRG & Associates Senior Associate Rajat Mohan instructed information company PTI, “The rise in sections displays a extra structured strategy to tax administration, incorporating fashionable compliance mechanisms, digital governance, and streamlined provisions for companies and people. The brand new legislation introduces 16 schedules and 23 chapters.”
The proposed laws additionally goals to offer better readability on the tax remedy of inventory choices (ESOPs) to attenuate tax disputes. Moreover, it incorporates judicial pronouncements from the previous 60 years to boost authorized certainty.
A significant shift from the present legislation is the delegation of sure powers to the Central Board of Direct Taxes (CBDT). Beneath the present system, the Earnings Tax Division should search parliamentary approval for varied procedural issues, tax schemes, and compliance frameworks. The brand new invoice empowers the CBDT to introduce such schemes independently, lowering bureaucratic delays and making tax governance extra environment friendly.
As per Clause 533 of the brand new legislation, the CBDT may have the authority to ascertain tax administration guidelines, implement compliance measures, and implement digital tax monitoring techniques with out requiring frequent legislative amendments.
After its introduction, the invoice is anticipated to be referred to a parliamentary standing committee for additional scrutiny.
Finance Minister Nirmala Sitharaman had introduced within the 2025-26 Finances that the brand new tax invoice could be launched in the course of the ongoing session of Parliament. The great overview of the Earnings Tax Act, 1961, was first introduced within the July 2024 Finances.
To facilitate the overview, the CBDT fashioned an inner committee to simplify and streamline the legislation, aiming to cut back disputes and supply better tax certainty. Moreover, 22 specialised sub-committees have been established to look at varied elements of the Earnings Tax Act.
Public suggestions was invited in 4 key areas: simplifying language, lowering litigation, easing compliance, and eliminating redundant provisions. The Earnings Tax Division obtained 6,500 ideas from stakeholders as a part of this overview course of.
Slabs Revised For New Regime
There can be no tax burden on as much as Rs 12 lakh annual revenue, besides particular revenue. The revised slabs will profit these incomes greater than that from the following monetary 12 months, serving to taxpayers with extra disposable revenue.
Listed here are the brand new tax slabs and the way it compares with the present construction:
Tax Slabs For FY25-26 (proposed)
As much as Rs 4 Lakh: Nil
Rs 4-8 lakh: 5%
Rs 8-12 lakh: 10%
Rs 12-16 lakh: 15%
Rs 16-20 lakh: 20%
Rs 20-24 lakh: 25%
Above Rs 24 lakh: 30%
Tax Slabs For FY24-25 (present)
As much as Rs 3 lakh: Nil
Rs 3-7 lakh: 5%
Rs 7-10 lakh: 10%
Rs 10-12 lakh: 15%
Rs 12-15 lakh: 20%
Above Rs 15 lakh: 30%
No Tax Up To Rs 12 Lakh
These incomes as much as Rs 12 lakh yearly will not need to pay any revenue tax beneath the brand new regime. Add to it the usual deduction of Rs 75,000 and taxpayers with as much as Rs 12.75 lakh annual revenue must pay zero tax.
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