The CA Institute, the world’s largest accounting body, on Friday expressed strong support for the newly introduced Income Tax Bill, 2025, highlighting its potential to simplify India’s tax framework and stimulate economic growth.
Newly elected ICAI President, Charanjot Singh Nanda, lauded the bill as a significant measure for strengthening employment generation and fostering the growth of Micro, Small, and Medium Enterprises (MSMEs). He emphasised that the bill’s streamlined provisions are poised to bolster the Indian economy.
In a proactive move to assist its members in understanding the nuances of the new legislation, ICAI has launched the a New Income Tax Bill 2025 GPT, a tool designed to provide quick summaries and in-depth analyses of the bill’s provisions, Nanda said.
- Read BL Explainer: New Income Tax Bill: What’s in it for taxpayers?
Additionally, ICAI is forming a five-member group tasked with closely examining various aspects of the new income tax bill to ensure comprehensive understanding and effective implementation, he added.
The structure of the Income Tax Bill 2025 reflects a concerted effort to simplify the six-decade-old tax framework. Key changes include replacing the traditional concepts of a “previous year” and “assessment year” with “tax year” and “financial year succeeding the tax year,” respectively.
The bill also eliminates provisos and explanations, groups related provisions for coherence, and extensively uses tables to enhance comprehension. Exemption provisions are detailed in schedules, and the bill’s main provisions reference these schedules for clarity.
Notably, provisions related to charitable trusts, previously scattered across different chapters of the Income-tax Act, 1961, have been consolidated into a single chapter. All Tax Deducted at Source (TDS) provisions are now contained within one section, presented in a tabular format. Presumptive income provisions for residents and non-residents have been grouped and presented in single clauses, respectively. The removal of obsolete sections has resulted in a less voluminous bill, with the word count reduced by almost 50 per cent compared to the previous Act. These efforts represent a genuine attempt to simplify income-tax law for ease of reading and comprehension.
The removal of outdated sections aligns with ICAI’s prior suggestions for a comprehensive review of the Income-tax Act, 1961. ICAI had provided a detailed list of obsolete sections and schedules recommended for removal. The bill also proposes changes in definitions now referred to as interpretations of terms such as capital asset, relative, property, maximum marginal rate, and advance ruling, which is in line with ICAI’s suggestions. Further, ICAI’s recommendations regarding increasing the salary threshold for specified employees for perquisite valuation, implementing a simplified regime for smaller trusts and institutions, taxing long-term capital gains of business trusts at 12.5 per cent rather than the maximum marginal rate, and raising threshold limits for TDS under certain provisions have been incorporated into both the Finance Bill, 2025, and the Income-tax Bill, 2025.
