Image for representation.
Credit: iStock Photo
Finance Minister Nirmala Sitharaman, while introducing the Bill in the Lok Sabha, had said that "substantial changes" have been made in the Bill. The number of words has been halved from 5.12 lakh, and the number of chapters also has been halved to 23 from 47 currently. Following the introduction, the Bill was referred to the select committee of the Lok Sabha that is mandated to submit its report by March 10.
Here are all the major changes brought in the Income Tax Bill 2025:
Structural Overhaul and Simplification
The new bill, introduced in the Lok Sabha, has a word count of 2.6 lakh, lower than 5.12 lakh in the I-T Act.
The number of chapters has also been halved to 23 from 47, according to the FAQ issued by the I-T department.
The Income Tax Bill 2025, has 57 tables, compared to 18 in the existing Act, and removed 1,200 provisos and 900 explanations.
Provisions relating to exemptions, and TDS/TCS have been made crispier in the Bill by putting them in a tabular format, while the chapter for not-for-profit organisations has been made comprehensive with the use of plain language. As a result of this, the word count has come down by 34,547.
New Deductions and Exemptions
EV deduction: New deduction for interest on loan taken to purchase electronic vehicles.
Agnipath Scheme deduction: Special deductions introduced for contributions made under the Agnipath Scheme.
Increased political donation deductions: Provisions have been updated in relation to deductions for donations to political parties. Deductions in this case have remained the same.
Startup/Infrastructure incentives: Expansions have been made to deductions for profits from startups, SEZs, and infra projects.
Deduction for senior citizens: Rebates as well as deductions for senior citizens when it comes to savings and insurance have been expanded.
Tax Compliance and procedural changes
Deductions will not be allowed if the taxpayer does not file an income tax return on time.
Additions have been made to requirements for advance tax payments.
Changes in Tax treatment for corporations & mutual funds
Corporate: Provisions related to dividends from foreign companies have been revised, along with those from company mergers and capital gains.
New clarity has been provided on taxation on mutual fund investments and consolidations.
Anti-Avoidance, International Taxation
Double Taxation Avoidance Agreements (DTAA): Updates have been made on agreements with foreign countries to prevent evasion of taxes.
Cash transaction restriction: Expenses paid in cash above Rs 10,000 will not be allowed for tax deductions.
With PTI inputs