Finance Minister Nirmala Sitharaman to Introduce New Income Tax Bill in Parliament on Thursday
New Delhi: Finance Minister Nirmala Sitharaman is set to introduce a new Income Tax Bill in Parliament on Thursday. The government claims that the new bill aims to simplify the existing Income Tax Act of 1961, making it easier for the common man to understand and reducing litigation related to tax disputes.
The new Income Tax Bill is shorter in length compared to the current Income Tax Act of 1961 but includes more sections and schedules. The 622-page bill consists of 23 chapters and 16 schedules with 536 sections. In contrast, the existing Income Tax Act has 298 sections, 14 schedules, and spans over 880 pages.
Key Changes in the New Income Tax Bill
- Introduction of Taxation Year Concept
The bill introduces the concept of a “Taxation Year,” replacing the existing terms “Assessment Year” and “Previous Year,” which often create confusion for taxpayers while filing returns. Under the new system, if income is earned from April 1, 2025, to March 31, 2026, it will be considered as Tax Year 2025-26. - Increase in Auditable Income Limit
The auditable income threshold has been increased by 50%, from ₹2 crore to ₹3 crore. Additionally, only Chartered Accountants will continue to conduct audits, dismissing earlier speculations that Company Secretaries might also be allowed. - Revised Tax Audit Filing Deadline
The deadline for filing tax audit reports has been extended from September 30 to October 31. - Classification of Digital Assets
Digital assets will now be categorized as undisclosed income, similar to cash, gold, silver, and jewelry, ensuring better regulation of virtual assets. - Implementation from April 1, 2026
The new Income Tax Law will come into effect from April 1, 2026, making the first taxation year 2026-27.
No Changes in Key Taxation Aspects
The bill does not introduce any modifications to the financial year system, income tax return (ITR) filing process, tax slabs, or capital gains tax deadlines.
JPC Report on Waqf (Amendment) Bill 2024 Likely to be Tabled
In addition to the Income Tax Bill, the Joint Parliamentary Committee (JPC) report on the Waqf (Amendment) Bill 2024 may also be presented in the Lok Sabha. The committee had submitted its draft report to Speaker Om Birla on January 30.
The JPC was formed on August 22 to review amendments to the Waqf Bill, which was introduced in the Lok Sabha by Minister of Parliamentary and Minority Affairs Kiren Rijiju on August 8. The bill has faced strong opposition from parties like Congress and the Samajwadi Party, who have criticized it as being against the Muslim community.
Budget Session Schedule
The Budget Session of Parliament began on January 31. The first phase will continue until February 13, while the second phase will take place from March 10 to April 14.
