New Revenue Tax Invoice 2025 defined: 10 key takeaways for taxpayers – high factors it is best to know

By Rama Karmakar
New Revenue Tax Invoice 2025 defined: The proposed Revenue Tax Invoice, 2025 (‘new invoice’) anticipated to come back into impact on 01 April 2026, which is able to substitute the prevailing Revenue Tax Act, 1961 (‘Act’), was launched within the Lok Sabha on 13 February. Taxpayers are fairly eager to know how these adjustments will affect their tax issues and tasks.
Listed here are 10 important takeaways from the brand new invoice that each taxpayer ought to know:
1. Simplified laws: The brand new invoice goals to simplify the present tax system by decreasing the part depend from 819 to 536 and decreasing the phrase depend by 40% to 50%. A big variety of explanations and circumstances (provisos) have been eliminated.
2. Introduction of tax 12 months: The brand new invoice proposes the adoption of ‘tax 12 months’ to remove confusion between phrases like earlier 12 months (i.e., monetary 12 months) and evaluation 12 months. It will assist present readability relating to tax funds, submitting dates, and different compliance necessities. The tax 12 months will usually run from 01 April to 31 March of the next 12 months.
3. Simplification of authorized language: Authorized jargon and complicated phrases like ‘however something contained’ shall be changed with less complicated language like ‘no matter something contained.’ Formulation and tables have been added to obviously current key provisions, particularly for wage perquisites, presumptive taxation and TDS/TCS charges. This transfer is designed to make the tax legal guidelines extra comprehensible for taxpayers.
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4. Residency legal guidelines stay unchanged: The residency legal guidelines proceed to stay the identical. The brand new invoice retains the present residency provisions intact, which classify people into three classes of residents: Ordinarily resident, Not-ordinarily resident and Non-resident, which is set foundation bodily presence in India.
5. Heads of earnings stay intact: The brand new Invoice has proposed no change in heads of earnings in comparison with the prevailing Act. A welcome transfer within the new invoice is the elimination of many present redundant provisions which have turn into out of date over time.
6. Addition of recent schedules: The brand new invoice provides two new schedules, enhancing the full variety of schedules to sixteen, to enhance the group of the brand new invoice. Detailed sections from the present legislation have been moved to separate schedules for higher readability. Nonetheless, the construction of twenty-three chapters, will stay unchanged for stability.
7. Simple referencing by salaried class: Wage-related provisions are actually consolidated in a single part for simpler understanding, eliminating the necessity for a number of references. Deductions like gratuity and go away encashment are actually a part of the wage chapter. Allowances like Go away Journey concession and Home Lease allowance are included in Schedule II and III of the brand new invoice. The aim is improved readability via tables and formulation.
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8.Streamlined provisions for exempt Revenue: Current provisions for exempt earnings, beforehand detailed in Part 10, are actually moved to separate schedules. This restructuring ensures that the tax legal guidelines are clearly outlined and arranged.
9. Streamlining TDS guidelines: Tax Deducted at Supply (TDS) laws shall be simplified underneath the brand new invoice making it extra clear and simpler for taxpayers to know and adjust to TDS obligations. Whereas this can require updates to kinds and reporting instruments after the new Revenue Tax Act is carried out, it would in the end simplify the method for taxpayers. The brand new invoice permits taxpayers to use for decrease or nil withholding tax certificates throughout all TDS/TCS provisions, fairly than a choose few, thereby decreasing compliance burdens for taxpayers
10. Funds 2025 updates integrated: The adjustments proposed in Funds 2025, akin to the brand new charges for the concessional tax regime have additionally been integrated within the new Invoice.
The Revenue Tax Invoice, 2025 is a superb begin to simplify the prevailing Revenue Tax Act, 1961, which is greater than six many years outdated and is anticipated to hold ahead the spirit of ‘Nyaya’ as talked about by the Finance Minister in her Funds 2025 speech. The brand new invoice demonstrates the federal government’s dedication to fostering a tax ecosystem that’s each clear and environment friendly.
(Rama Karmakar is Companion, EY India. Rajesh Sureshan, Director, EY India additionally contributed to the article)
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