Simpler, streamlined, stable: The New Income-tax bill 2025 explained

Finance Minister Nirmala Sitharaman introduced the Income-tax Bill, 2025 during the Budget session on 1 February 2025, aimed at streamlining and simplifying the nation’s tax framework. The bill is structured around three core principles: textual and structural simplification, policy continuity, and the preservation of existing tax rates. This comprehensive overhaul ensures ease of compliance while maintaining predictability for taxpayers.

The government’s decision to retain existing taxation principles underscores its commitment to policy stability. By avoiding abrupt policy shifts or tax rate changes, the bill focuses on a predictable fiscal environment for businesses and individuals alike.

A more concise and readable tax law

The proposed bill helps remove the complex and voluminous clauses from the Income-tax Act of 1961. Key changes include:

• Reduction in word count: The word count has been cut down from 512,535 words in the existing law to 259,676 words, eliminating 252,859 words for better clarity.

• Streamlining of chapters and sections: The number of chapters has been reduced from 47 to 23, and sections have been brought down from 819 to 536, making it easier to navigate.

• Enhanced use of tables and formulae: The bill increases the number of tables from 18 to 57 and formulae from 6 to 46, improving structural coherence and accessibility.

The vision: The Ministry of Finance (MoF) and the Central Board of Direct Taxes (CBDT) have emphasised that the Income-tax Bill, 2025, which represents a major step toward a modernised tax framework, will reduce complexity, making the bill simple to read, and improving usability. The bill will create a tax ecosystem that is both efficient and transparent.

While the country moves forward with this restructured tax regime, experts believe the simplifications introduced in the bill will significantly enhance the ease of doing business while ensuring compliance remains straightforward for all taxpayers.