A Comprehensive Revamp of India's Tax Laws
The Indian government is poised to introduce the Income-Tax Bill, 2025, a significant overhaul of the nation's tax system. This new legislation, scheduled to take effect from April 1, 2026, aims to simplify tax structures, enhance compliance, and curb tax evasion.
The Bill introduces a more organized structure with 16 schedules and 23 chapters, compared to the existing 14 schedules. This restructuring aims to improve clarity and accessibility for taxpayers. The Bill clearly defines taxable income, residency status, and income sources, covering salaries, business profits, capital gains, and foreign earnings. Exemptions for charitable trusts and political parties remain, while deductions for salaries, rent, and employee welfare expenses have been specified.
A key feature of the new tax law is the restructuring of sections to make tax provisions more accessible and easier to understand for taxpayers. The Bill also introduces faceless assessment and dispute resolution mechanisms, reducing bureaucratic delays and human intervention.
Tax compliance will be further streamlined with mandatory electronic filing, expanded tax audit requirements, and digitized documentation. The General Anti-Avoidance Rule (GAAR) has been reinforced, along with stricter transfer pricing regulations to monitor cross-border transactions and prevent tax avoidance.
The Bill is expected to omit references to the old tax regime, officially making the new tax regime the default. However, taxpayers can still opt for the old tax regime if they choose.
With a focus on digital compliance, transparency, and efficient tax administration, the Income-Tax Bill, 2025, marks a significant shift in India's taxation framework. This comprehensive revamp aims to create a more efficient and equitable tax system for the nation.