Finance Minister Nirmala Sitharaman will introduce the new Income-Tax Bill 2025 in the Lok Sabha today, February 13. The Bill aims to streamline and update the country’s taxation laws.

According to the official parliamentary schedule for Thursday, “Smt. Nirmala Sitharaman will seek leave to introduce a bill to consolidate and amend the law relating to income tax.”

The new Income-Tax Bill seeks to replace the outdated Income Tax Act of 1961, which has expanded significantly over the decades due to numerous amendments. While the Bill does not impose any new taxes, it simplifies the language of the existing Act. The new law is expected to take effect from April 2026.

Removal of Obsolete Provisions

Experts suggest that the Bill will eliminate outdated sections, reduce litigation, and improve tax compliance. It aims to simplify tax laws, making them more transparent, easier to interpret, and taxpayer-friendly.

Simplified Language and Concepts

One major change is the replacement of technical terms like “assessment year” and “previous year” with the more intuitive “tax year.” Under the new system, the tax year—beginning on April 1—will replace the current approach, where income from the “previous year” is assessed in the “assessment year.” For example, income earned between April 2024 and March 2025 will now fall under the tax year 2024-25.

The Bill also removes redundant provisions, such as those related to the Fringe Benefit Tax. Additionally, it eliminates complex legal jargon, including excessive use of the term “notwithstanding,” replacing it with “irrespective” for better readability.