New Income Tax Bill, 2025, set to replace 1961 Act from Apr 2026
New Delhi: The Income Tax Bill, 2025, which is expected to be tabled in Parliament soon, will come into effect from April 1, 2026, replacing the Income Tax Act, 1961, Business Standard reported.
The proposed legislation reduces the number of sections to 536, streamlines tax provisions across 16 schedules, and condenses the law to 622 pages, compared to the 823-page existing framework.
According to a draft of the bill shared with Members of Parliament, it introduces a new definition of a ‘tax year’ as the 12-month financial year beginning in April.
One of the key provisions is a major reform in the taxation of virtual digital assets (VDAs), which could reshape the regulatory landscape for cryptocurrency and other digital assets.
Additionally, explanations and provisos have been eliminated for improved clarity and interpretation of tax laws.
The bill also simplifies salary deductions by consolidating standard deduction, gratuity, and leave encashment provisions into a single section, instead of dispersing them across multiple sections and rules.
Furthermore, the old tax regime will remain in place, allowing taxpayers the flexibility to choose between the old and new systems based on their financial preferences.
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