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Budget Session: “I propose to introduce the income tax bill next week,” said Finance Minister Nirmala Sitharaman during her Budget Speech
Income Tax Changes In Budget 2025.
Budget session: Finance Minister Nirmala Sitharaman, during the Budget presentation on Saturday, announced that a new income tax bill – a direct tax code meant to simplify compliance for individual tax payers – will be introduced next week.
“In Part A, I have briefly underlined Taxation Reforms as one of key reforms to realize our vision of Viksit Bharat. In respect of criminal law, Our Government had earlier ushered in Bharatiya Nyaya Sanhita replacing Bharatiya Danda Sanhita. I am happy to inform this August House and the country that the new income-tax bill will carry forward the same spirit of “Nyaya”,” said Sitharaman.
The FM said, “The new bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.”
“Reforms, however, are not a destination. They are a means to achieve good governance for our people and economy. Providing good governance primarily involves being responsive,” she added.
The FM also announced new tax slabs in the new regime:
- Zero to Rs 4,00,000: No Tax
- Rs 4,00,000 to Rs 8,00,000: 5%
- Rs 8,00,0001 to Rs 12,00,000: 10%
- Rs 12,00,001 to Rs 16 lakh: 15%
- Rs 16,00,001 to Rs 20 lakh : 20%
- Rs 20,00,001 to Rs 24 lakh — 25%
- Above Rs 24 lakh: 30%
To tax payers up to Rs 12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them.
Also, effectively those earning up to Rs 13 lakh will now be able save income tax as over and above the Rs 12 lakh income limit, there is a standard deduction of Rs 75,000, and a marginal relief of around Rs 30,000.
Sandeep Chilana, Managing Partner, CCLaw, said, “A complete overhaul of the Income Tax Act is a bold step, but the real question is whether it will truly simplify compliance or just reorganize complexities. If the new law can bring predictability, reduce disputes, and ease tax administration, it will be a game-changer. However, businesses and professionals will be watching closely to see how it handles legacy issues like retrospective taxation, complex exemptions, and litigation-heavy provisions. The success of this reform will depend on how effectively it balances revenue needs with a taxpayer-friendly approach.”
Pursuant to the Budget announcement by Sitharaman for a comprehensive review of the I-T Act, 1961, the CBDT had set up an internal committee to oversee the review and make the Act concise, clear, and easy to understand, which will reduce disputes, litigation, and provide greater tax certainty to taxpayers. Also, 22 specialised sub-committees were established to review various aspects of the Act.
