Union Finance Minister Nirmala Sitharaman presented the new Income Tax Bill 2025 in the Lok Sabha, designed to simplify tax language and remove unnecessary jargon. The bill introduces the term "Tax Year," replacing the complex terms "Previous Year" and "Assessment Year." This initiative was first announced during her Budget speech on February 1.

 

While moving for the bill's introduction, Sitharaman requested that it be referred to a select committee for further evaluation, with a report expected by the start of the next session. The proposed legislation aims to streamline tax laws without introducing new taxes, focusing instead on reducing legal complexities and easing compliance for taxpayers.

 

The new bill is significantly more concise, featuring 536 sections and 622 pages, compared to the existing Income Tax Act of 1961, which has 298 sections spread over 1,647 pages. Key changes include shorter sentences and clearer explanations, with an emphasis on reducing litigation. Additionally, the bill may lower penalties for certain offenses to create a more taxpayer-friendly environment.