The Union Finance Ministry today clarified that no modifications have been done in the existing tax rates in the Income Tax Bill, 2025 tabled by the Finance Minister Nirmala Sitharaman in Lok Sabha today. The ministry also said no major tax policy changes have been done to ensure continuity and certainty.

“The Income-tax Bill, 2025 was tabled in Parliament today, marking a significant step toward simplifying the language and structure of the Income-tax Act, 1961. The simplification exercise was guided by three core principles: textual and structural simplification for improved clarity and coherence; no major tax policy changes to ensure continuity and certainty; no modifications of tax rates, preserving predictability for taxpayers,” the finance ministry said in a release.

“A three-pronged approach was adopted: Eliminating intricate language to enhance readability. Removing redundant and repetitive provisions for better navigation and reorganising sections logically to facilitate ease of reference,” the ministry said.

This has led to a substantial reduction in the Act’s volume, making it more streamlined and navigable, said the ministry.

Tax practitioners have welcomed the bill. “The Income Tax Bill 2025 represents a significant reform aimed at modernizing and simplifying India’s tax framework. It restructures provisions by increasing the number of sections while reducing overall length, enhancing clarity and ease of interpretation. All the provisions pertaining to salary have been consolidated at one place for ease of understanding so that the taxpayer does not have to refer to separate chapters for filing his return of income,” said Akhil Chandna, Partner, Grant Thornton Bharat.

“The bill also formally classifies virtual digital assets, such as cryptocurrencies, under taxable income, eliminating ambiguity. The tax slabs and rates are now structured in tabular format to improve accessibility. With a strong emphasis on digital compliance, the bill streamlines tax filing, dispute resolution, and assessment procedures, reducing litigation risks," he added.

"Expected to take effect from 01 April 2026, the reform reflects the government’s intent to enhance tax certainty, promote ease of doing business, and align with international best practices,” said Chandna.

“The new Income Tax Act 2025 is largely a cleanup exercise of the tax statute to enhance readability and simplify provisions by using tables, schedules and formulae," said Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co.

There are no significant policy changes or structural tax reforms. Admittedly, the new act was not meant to fill in legislative gaps or address existing interpretational issues. While the new proposed law does not rock the boat, the hope is that the innocuous language changes will not spring up any new tax disputes,” Puri added.

“Once approved by the President, the government will update tax rules, forms and IT systems accordingly. Businesses will also need to update their systems at the same time. Overall, this marks a transition towards a more modern tax system for both taxpayers and the administration,” said Sanjay Tolia, Partner, PWC.

The release said the ministry held widespread stakeholder engagement, consulting taxpayers, businesses, industry associations, and professional bodies, while drafting the bill. “Out of 20,976 online suggestions received, relevant suggestions were examined and incorporated, where feasible. Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices,” it added.