Understanding the New Income-tax Bill, 2025: Key Highlights and Structural Overview
The Income-tax Bill, 2025, brings a structured and comprehensive approach to taxation in India. With the financial year running from April 1 to March 31, the new bill categorizes taxpayers into three residency classifications:
1. Ordinarily Resident Individuals
2. Non-Ordinarily Resident Individuals
3. Non-Resident Individuals
To simplify tax compliance for individuals, all salary-related deductions have been consolidated in a single tabular format. This ensures taxpayers can easily access and understand the applicable deductions.
Tax Deduction at Source (TDS) Compliance
A major highlight of the new bill is Chapter XIX, which focuses on Tax Deduction at Source (TDS). It outlines the necessary compliance measures, applicable conditions, and rules governing TDS deductions.
For better clarity, two separate tables have been introduced:
“No Deductions at Source” Table – Lists incomes that are exempt from TDS.
“Declaration for Tax Deduction at Source” Table – Specifies conditions under which tax deductions can be claimed.
Structural Breakdown of the Income-tax Bill, 2025
The bill is well-organized into 23 chapters and 16 schedules, covering every aspect of taxation. Below is a brief overview of its key chapters:
1. Preliminary
Defines the scope, applicability, and key terminologies of the Income-tax Bill, 2025.
2. Basis of Charge
Explains the fundamental principles that determine tax liability, including residency-based taxation.
3. Incomes That Do Not Form Part of Total Income
Lists categories of exempted income, ensuring clarity on non-taxable earnings.
4. Computation of Total Income
Provides guidelines on how total income is calculated, including permissible deductions.
5. Income of Other Persons Included in Total Income of Assessee
Covers taxation of clubbed income, ensuring individuals cannot evade tax by shifting income.
6. Aggregation of Income
Explains rules related to combining various sources of income before taxation.
7. Set-Off or Carry Forward and Set-Off of Losses
Defines provisions for setting off past losses against future income.
8. Deductions in Computing Total Income
Details deductions under various sections for taxpayers’ benefit.
9. Rebates and Reliefs
Discusses tax rebates and relief mechanisms available to individuals and businesses.
10. Special Provisions to Prevent Tax Avoidance
Introduces anti-avoidance measures to curb tax evasion practices.
11. General Anti-Avoidance Rules (GAAR)
Specifies regulations to prevent misuse of tax provisions through artificial transactions.
12. Mode of Payment in Certain Cases
Defines prescribed modes of payment to maintain transparency in financial transactions.
13. Determination of Tax in Special Cases
Addresses taxation norms for special cases such as foreign entities or specific industries.
14. Tax Administration
Lays out procedural requirements for smooth tax governance.
15. Return of Income
Specifies rules for filing income tax returns and compliance requirements.
16. Procedure for Assessment
Describes the assessment process followed by tax authorities.
17. Special Provisions Relating to Certain Persons
Outlines specific provisions applicable to particular taxpayer categories.
18. Appeals, Revisions, and Alternate Dispute Resolutions
Explains mechanisms for resolving tax disputes, including appeals and settlements.
19. Collection and Recovery of Tax
Covers methods of tax collection, including TDS and advance tax provisions.
20. Refunds
Details the process for claiming tax refunds and related timelines.
21. Penalties
Lists penalties for non-compliance, late filing, or tax evasion.
22. Offences and Prosecution
Defines legal consequences for serious tax violations and fraud.
23. Miscellaneous
Includes other essential tax provisions and transitional measures.
Conclusion
The Income-tax Bill, 2025, is a well-structured legal framework aimed at streamlining taxation in India. By consolidating deductions, strengthening tax compliance, and introducing clear tax avoidance measures, the bill ensures transparency and efficiency in tax administration.
With new provisions for TDS, tax computation, deductions, and dispute resolution, taxpayers and businesses must stay informed about the latest changes. Understanding this framework can help individuals and organizations optimize their tax liabilities while ensuring full compliance with the law.
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