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New Income Tax Bill, 2025: Section 80D is now Clause 126 under the new bill, Section 80E is Clause 129, Section 87A is Clause 157; know all major clauses under the new income tax Bill:
New Income Tax Bill 2025.
Income Tax Bill 2025: Finance Minister Nirmala Sitharaman on Thursday introduced the Income Tax Bill, 2025, in Parliament, aimed at overhauling India’s direct tax structure by simplifying the language for better readability. This new bill, expected to be effective from April 1, 2026, once approved from Parliament, restructures several provisions from the existing Income Tax Act, 1961, into a new framework with revised section numbers, among several other changes. Taxpayers, businesses, and professionals must familiarise themselves with these changes to ensure compliance and optimise tax planning.
Understanding the Changes: Key Section Mapping
The government has restructured various sections under different categories such as deductions, exemptions, rebates, capital gains, and income from other sources. Below is a comparative mapping of some of the most common sections under the existing Income Tax Act, 1961, and their corresponding clauses in the Income Tax Bill, 2025.
1. Deductions
Deductions help taxpayers reduce their taxable income by investing in eligible instruments or making specific expenditures. The new bill has reassigned these deductions to different clause numbers:
– Section 80C (Deductions for investments in PPF, NSC, life insurance premiums, etc.) → Clause 123
– Section 80D (Deductions for medical insurance premiums) → Clause 126
– Section 80E (Deductions on interest paid on education loans) → Clause 129
– Section 80G (Deductions for donations to charities and funds) → Clause 133
Importantly, these Clauses will become Sections once the Income Tax Bill 2025 is passed.
2. Rebates
Rebates directly reduce the tax liability of eligible taxpayers. The most common rebate provision has been renumbered:
– Section 87A (Rebate for individuals with income below a specified threshold- Rs 12 lakh announced in Budget 2025-26) → Clause 157
3. Capital Gains
Capital gains exemptions and taxation rules have also been renumbered:
– Section 54 (Exemption on capital gains from selling a residential property) → Clause 82
– Section 54EC (Exemption on capital gains if invested in specified bonds) → Clause 85
4. Set-off and Carry Forward of Losses
Taxpayers can offset losses against gains under specific provisions. The following sections have been reassigned:
– Section 70 (Set-off of losses from one source against income from another under the same head) → Clause 108
– Section 71 (Set-off of losses from one head against income from another head) → Clause 109
Implications for Taxpayers
With these changes, taxpayers need to stay updated on the new numbering system to correctly apply deductions and exemptions. It is advisable to consult with tax professionals to ensure compliance and maximise tax benefits under the new structure.
A complete mapping of all sections from the Income Tax Act, 1961, to the Income Tax Bill, 2025, can be read here: https://incometaxindia.gov.in/Documents/income-tax-bill-2025/new-bill-2025-navigator.pdf.
The Income Tax Bill, 2025, aims to simplify the existing income tax law.
