Introduction of the New Income Tax Act

• The new Income Tax Act is set to replace the existing Income Tax Act, 1961.
• Expected to come into force from April 1, 2026.
• Aims to simplify and modernize the tax system for better compliance.

Will the New Act Affect Tax Liabilities?

• No changes in tax rates or slabs have been proposed.
• The tax slabs and rates announced in the Union Budget 2025-26 will apply.
• For FY 2024-25, the tax rates remain as per the previous budget.
• The Act mainly focuses on simplifying the structure rather than altering tax liabilities.

Purpose of the New Bill

• To make tax regulations concise, clear, and user-friendly.
• Removal of redundant provisions to ease compliance.
• Encourages voluntary compliance from taxpayers.
• Enhances the ease of doing business.
• Addresses the complexity caused by frequent amendments over the years.

Introduction of ‘Tax Year’ Concept

• The new bill removes the concept of ‘Assessment Year’ (AY).
• A single term ‘Tax Year’ will be used, reducing confusion.
• Tax Year = Financial Year (April 1 – March 31).
• For new businesses or sources of income, the tax year will begin from the date of establishment and end on March 31.

How Concise is the New Bill?

• 622 pages, nearly half of the original 1961 Act (which had 880 pages).
• 536 sections, more than the existing 298 sections.
• 16 schedules, compared to 14 in the current law.
• Number of chapters remains unchanged at 23.

Timeline for Implementation

• The bill will be introduced in Lok Sabha on February 13, 2025.
• Expected to be sent to a parliamentary standing committee for review.
• Will be debated and passed in both houses of Parliament.
• Sent for Presidential assent before becoming law.
• Planned enforcement date: April 1, 2026.