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1 / 10Structural overhaul and simplification | The new bill restructures tax law by reducing the number of chapters from 51 to 23. However, the number of sections has increased from 298 to 536. The word count has also been cut by half from the existing 5.20 lakh words, making it concise and easier to interpret.
2 / 10To improve clarity, complex terminologies like “assessment year” and “previous year” have been replaced with simpler terms such as “tax year” and “financial year.” Additionally, explanations and provisos have been removed to minimise ambiguity, and cross-referencing between sections has been reduced, allowing taxpayers to understand provisions more easily.
3 / 10Compliance and interpretation improvements | The bill introduces a Taxpayer’s Charter, which aims to enhance taxpayer rights and simplify tax administration. Digital compliance measures have also been strengthened, aligning with the government’s push for digitisation.
4 / 10According to Feroze Azeez, Deputy CEO, Anand Rathi Wealth, “The Income Tax Bill 2025 is a significant step towards simplification compared to the Income Tax Act 1961. With clearer language and a more structured layout, it increases the common man’s ability to interpret the law. The government has also lived up to its promise of not making substantial changes compared to the existing law, and most of the laws remain unchanged.”
5 / 10Key provisions and taxation clarifications | The bill retains the existing tax rates for individuals, corporates, and capital gains, ensuring continuity for taxpayers. There had been speculation about major changes in capital gains tax, but sources have confirmed that no tax rate has been altered in the new bill.
6 / 10Virtual digital assets are explicitly included under the definition of “property,” but taxation remains at 30% as per the current law. Additionally, revenue recognition for service contracts, mark-to-market (MTM) loss provisions, and inventory valuation have been clearly defined, moving from the Income Computation and Disclosure Standards (ICDS) into the primary tax law for better transparency.
7 / 10Better organisation and consolidation | The bill consolidates various salary deductions, such as standard deduction, gratuity, and leave encashment, into a single section instead of spreading them across multiple provisions. Similarly, income categories that do not form part of the total income are now placed in dedicated schedules for better understanding.
8 / 10Definitions have also been streamlined with formula-based approaches replacing verbose legal descriptions, such as for Written-Down Value (WDV) of assets. Tax Deducted at Source (TDS) provisions have been grouped under a single clause, with tabular formats improving clarity.
9 / 10Digital focus and increased compliance measures | A key highlight of the bill is the growing emphasis on digital transactions and compliance. According to Lokesh Shah, Partner, IndusLaw, “The term ‘digital’ appears 47 times in the new Income Tax Bill, reflecting the importance of digitalisation in tax administration. Several provisions within a section have been restructured into separate sections. Exempt income and exemption conditions are now summarised in tabular formats within a separate schedule, making compliance easier.”
10 / 10Penalties for misreporting, non-compliance, and incorrect disclosures have been enhanced.
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