Income-tax Bill, 2025

The finance minister introduced the Income-tax Bill, 2025 (the Bill), in Parliament. Once enacted, it will replace the current Income-tax Act, 1961 (the 1961 Act), which has been in existence for over six decades. The Bill is slated to become effective on 1 April 2026.

The Bill largely aligns with the existing provisions of the 1961 Act and seeks to simplify the legislation by consolidating similar provisions, eliminating obsolete sections, and presenting some information in a tabular format.

The Bill has removed the concept of assessment year and has reclassified previous year as a tax year. Further, the "explanations" and "provisions" in the 1961 Act have now been introduced as sub-sections.

With massive reduction in sections and chapters, the Bill aims to simplify the legislation, making it concise.

Income-tax Bill, 2025

The Bill seeks to simplify the legislation by consolidating similar provisions, eliminating obsolete sections, and presenting some information in a tabular format

This micro-site is your consolidated resource for all Income-tax Bill, 2025 related information. Through this platform, KPMG in India’s partners and sector leaders will engage with you and share their views and insights.

KPMG in India’s survey on the proposed comprehensive review of the Income-tax Act, 1961

KPMG in India conducted an online survey to understand industry views and expectations from the simplification exercise

Our leaders on the New Income Tax Bill 2025

Sunil Badala
Parizad Sirwalla
Himanshu Parekh
Naveen Aggarwal

Sunil Badala

Partner, Head of Tax

KPMG in India

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The Income-tax Bill, 2025, largely aligns with the existing provisions of the Income-tax Act, 1961. At first glance, it aims to simplify the legislation by consolidating similar provisions, eliminating obsolete sections, and presenting some information in a tabular format. This approach has reduced the word count by 45 percent and decreased the number of sections from over 800 (counting alphanumeric sections like Section 115A through Section 115WM individually) to 536 sections.

Other notable changes include the adoption of terms like "tax year" instead of "previous year," the elimination of the assessment year concept, rephrasing "explanations" and "proviso" as sub-sections and breaking long sentences into shorter clauses to improve readability and implementation. The Bill continues to reference certain definitions from the Income-tax Act, 1961, and there are many cross-references between tables, which could make the reading slight cumbersome.

Parizad Sirwalla

Partner and National Head – Tax, Global Mobility Services

KPMG in India

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As anticipated, the Bill largely aligns with the existing provisions and does not introduce any additional taxes. It is a well-crafted attempt to simplify the language and make it more lucid by eliminating redundant provisions, using tabular formats etc. The introduction of tax year concept in lieu of assessment year and previous year, will make it more comprehensible for the taxpayer and is aligned with the global terminologies. The choice of the two taxregimes continues to individual taxpayers.

Himanshu Parekh

Partner and Head of Tax (West)

KPMG in India

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The new IncomeTaxBill, 2025 represents a significant overhaul of India's tax legislation, marking a pivotal shift towards simplification and modernisation of the Income-tax Act of 1961 (‘the 1961 Act’). The Bill, which spans into 622 pages, reduces the complexity of the 1961 Act and replaces intricate legal jargons with clear and straightforward language. Another notable aspect of the Bill is the strategic use of tables and formulas, which will help simplify interpretation of the provisions. The Bill aims to minimize disputes and litigation while enhancing taxpayer certainty. Notably, the Bill introduces a "trust first, scrutinise later" philosophy, aligning with the government's ideology of "minimum government and maximum governance." Unlike the 1961 Act, the Bill empowers the CBDT to establish tax administration rules and implement digital tax monitoring systems, thereby increasing efficiency without frequent legislative changes. Scheduled to take effect on April 1, 2026, the Bill is set to foster a more transparent and taxpayer-friendly environment, representing a historic milestone in India's tax landscape.

Naveen Aggarwal

Office Managing Partner - Delhi NCR | India Global - U.S. Corridor Leader
KPMG in India

The process to repeal an over six decades old tax code is underway, which over the years had become complex as tax laws were amended to keep pace with emerging business realities.

The FAQs issued clearly reflect the intent of the new bill - make it more concise, reader friendly and importantly, mitigate the risk of variance in interpretation of explanations and provisos by replacing them with sub-sections and clauses. With an effective start date of April 1, 2026 (tax year replacing the previous year/assessment year concept), taxpayers have been given sufficient time to adapt to the changes that may be required in their internal tax departments to give effect to the proposed changes.

Perhaps, the expectations that the proposed bill would also herald a new era of dispute resolution mechanism may not have been addressed, however the door is not closed considering this government’s repeated acknowledgement of the need to address burgeoning taxdisputes.

Hear from the experts

Webinar on the Income-tax Bill, 2025

The Income-tax Bill, 2025, was tabled in the Parliament on 13 February 2025. Our webinar on decoding the Income-tax Bill, 2025 was led by our senior tax partners and subject-matter experts providing a detailed analysis on the changes and their implications

Union Budget Countdown | What To Expect From Budget 2025

Himanshu Parekh on Income Tax Bill 2025

The Income Tax Bill 2025 consolidates TDS provisions into one table, specifying rates for different transaction categories

Watch the full video

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Media

Headline	Partner
New Income Tax Bill: What taxpayers want from Modi government’s latest Income Tax Act - KPMG survey reveals The Times of India	Sunil Badala Gaurav Mehndiratta
New Income Tax Bill may simplify existing laws, but it comes with a sting in its tail The Week	Sunil Badala Gaurav Mehndiratta
New Income Tax Bill: Experts push for simplification, faster dispute resolution and tech driven reforms The Economic Times CFO	Sunil Badala