Finance Minister Nirmala Sitharaman says it did not impose any new tax rate and only simplified the language, which was required for understanding the complex Income Tax laws
Parliament on 12 August ,2025 Passed new Income Tax Bill to replace six decade year old Income Tax
Act,1961. That will come into force for April, 2026.
Piloting the Income Tax Bill, 2025 in the Rajya Sabha, Finance Minister Nirmala Sitharaman said it did not impose any new tax rate and only simplified the language, which was required for understanding the complex Income Tax laws. The new Bill removes redundant provisions and archaic language and reduces the number of Sections from 819 in the Income Tax Act of 1961 to 536 and the number of chapters from 47 to 23. The number of words had been reduced from 5.12 lakh to 2.6 lakh in the new Income Tax Bill, and for the first time, it introduces 39 new tables and 40 new formulas, replacing the dense text of the 1961 law to enhance clarity.
“These changes are not merely superficial; they reflect a new, simplified approach to tax administration.
This leaner and more focused law is designed to make it easy to read, understand and implement,” Ms. Sitharaman said while replying to a short debate in the absence of the Opposition in the Rajya Sabha.
Along with the Income Tax Bill, 2025, the House also returned the Taxation Laws (Amendment) Bill, 2025, to the Lok Sabha that hadpassed these money Bills on Monday. The Minister informed the House that soon the Finance Ministry would be issuing FAQs and an information memorandum for more information on the new legislation.
She further said Ministry officials were busy formulating rules, which would be simpler like the Bill. As the new law will come into force from April 1, 2026, the computer systems of the Income Tax department are required to be rebooted to operationalise the new legislation. The Taxation Laws (Amendment) Bill, 2025, also passed by voice vote in the Rajya Sabha, incorporated changes in the scheme of block assessment with regard to Income Tax search cases, and would provide for certain direct tax benefits to public investment funds of Saudi Arabia.
