Modernizing India's Tax Framework
The Income-Tax Bill, 2025, marks a significant step in modernizing India's tax framework. While it doesn't completely overhaul the existing system like the proposed Direct Taxes Code (DTC) of 2009 and 2010, it introduces key updates and refinements.
Tax Slabs: The DTC proposed uniform tax slabs, while the new bill retains a progressive tax system with revised slabs and deductions.
Corporate taxation remains largely unchanged, with the introduction of incentives for specific industries.
The DTC proposed electronic filing, while the new bill prioritizes faceless assessments and digital compliance to curb corruption.
The DTC sought uniformity across asset classes, whereas the new bill continues to distinguish between different investment types, maintaining indexation benefits.
The DTC lacked specific provisions, while the new bill introduces taxation for crypto-assets and digital transactions.
General Anti-Avoidance Rule (GAAR): Retained with refinements for effective implementation.
Updated, particularly for Non-Resident Indians (NRIs).
Defined and taxed, including cryptocurrencies and NFTs.
Simplify tax structures.
Enhance compliance.
Curb tax evasion.
Modernize tax legislation.
The new legislation is scheduled to come into effect from April 1, 2026. Experts believe it will improve clarity and ease of understanding for taxpayers, aligning with international practices.