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Income Tax Law
Understanding Income Tax Law: Then & Now
Income tax in India has undergone significant changes over the years, with the latest being the proposed Income Tax Bill, 2025. The current Income Tax Act, 1961, which has been in effect for decades, contains over 700 sections, making compliance complex and often confusing for taxpayers. In response, the Income Tax Bill, 2025, was introduced to simplify the tax structure, streamline provisions, and enhance clarity. If passed in Parliament, this new bill will become effective from April 1, 2026.
Key Differences Between the Income Tax Act, 1961 & the Income Tax Bill, 2025
| Particulars | Income Tax Act, 1961 | Income Tax Bill, 2025 |
|---|---|---|
| Number of Sections | More than 700 | 536 |
| Number of Chapters | 23 | 23 |
| Number of Schedules | 14 | 16 |
| Content (Pages) | 823 | 622 |
| Effective Date | Currently applicable | From April 1, 2026 |
The Concept of Tax Year vs. Previous Year & Assessment Year
One of the biggest changes in the Income Tax Bill, 2025, is the removal of the "previous year" and "assessment year" concepts
- In the current law, income earned in a previous year is taxed in the assessment year.
- The new bill introduces the term "Tax Year", which simplifies compliance and avoids confusion over which year the tax provisions apply.
- Instead of referring to an "Assessment Year", the new bill replaces it with "Succeeding Tax Year".
Key Changes in the New Income Tax Bill, 2025
1. Inclusion of Digital Assets & Online Income
- The bill formally includes Virtual Digital Assets (VDA) under taxable income.
- The definition of VDAs has been expanded to cover any asset with a digital representation of value using cryptographic technology.
- Undisclosed income now includes digital assets if not properly reported.
2. Revised TDS Provisions
- In the Income Tax Act, 1961, TDS (Tax Deducted at Source) was covered under Sections 192 to 194T.
- In the new Income Tax Bill, 2025, all TDS-related provisions are now consolidated into a single Section 393, making it easier to navigate.
- However, TDS rates and threshold limits remain unchanged.
3. New Tax Regime – Section 202 vs. Section 115BAC
- The current Income Tax Act, 1961 introduced the New Tax Regime under Section 115BAC, applicable to:
- Individuals
- Hindu Undivided Families (HUFs)
- The Income Tax Bill, 2025, covers the same tax regime under Section 202, but expands its scope to include:
- Association of Persons (AOPs)
- Body of Individuals (BOIs)
- Artificial Juridical Persons (AJPs)
- Opting out of the new tax regime remains an option.
- Deductions that were unavailable under Section 115BAC remain restricted under Section 202, ensuring continuity in tax planning.
4. Due Dates for Tax Filings Remain Unchanged
- The terminology has changed, but the due dates remain the same:
| Category of Assessee | Due Date (Current & New Bill) |
|---|---|
| Individuals, HUFs, or firms not subject to Tax Audit | 31st July |
| Companies | 31st October |
| Assessees subject to Tax Audit | 31st October |
| Partners & their spouses (if firm is subject to Tax Audit) | 31st October |
| Assessees with Transfer Pricing transactions | 30th November |
The Importance of Professional Guidance in Income Tax & How I Can Help
The evolving tax laws require careful planning, compliance, and dispute resolution to avoid penalties and optimize tax efficiency. With a shift from the Income Tax Act, 1961, to the Income Tax Bill, 2025, businesses and individuals must stay updated on new regulations. Here’s how I can assist:
- Income Tax Return (ITR) Filing & Assessments: Ensuring accurate tax filings and responding to scrutiny assessments.
- Tax Advisory & Planning: Providing strategic guidance on deductions, exemptions, and capital gains.
- Compliance & Audit Support: Assisting with tax audits and responding to notices from tax authorities.
- Litigation & Dispute Resolution: Representing clients before tax tribunals, appellate authorities, and courts.
- International Taxation & Cross-Border Transactions: Advising on Double Taxation Avoidance Agreements (DTAAs), Transfer Pricing, and global tax compliance.
By staying up to date with tax laws and case precedents, I provide practical solutions that help individuals and businesses avoid penalties and optimize tax efficiency while ensuring compliance.
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Why Do You Need Assistance of a Lawyer in Such Matters?
Navigating legal and tax-related matters can be complex, especially with evolving regulations and compliance requirements. Professional legal assistance ensures that individuals and businesses remain compliant while minimizing risks and avoiding costly disputes. Here’s why seeking professional guidance is essential:
For Income Tax Matters
- Changing Tax Laws: With the shift from the Income Tax Act, 1961, to the Income Tax Bill, 2025, individuals and businesses need guidance on new provisions.
- Assessment & Litigation Support: Legal representation is crucial in tax assessments,disputes with tax authorities.
- Strategic Tax Planning: Proper tax structuring can optimize deductions and minimize liabilities while ensuring full compliance.
- International & Digital Taxation: With growing cross-border transactions and digital assets, professional assistance is essential for compliance with global tax laws.
