Income Tax Bill 2025 proposed to replace the act of 1961 will replace the 6 decades old act and make tax cleaner, transparent. The new law makes more than 285 changes with the goal of making compliance simpler, decreasing litigation, and updating the definitions. The amended structure will come into reality in April 1, 2026 and it will affect salaried people as well as businesses.
The other drastic change is that concept of a tax year has been introduced instead of the previously used concept of previous year and assessment year. This implies that the taxpayers will now pay taxes in the income year that they earn making the process smooth and less confusing. The bill also reduces the volumes of the sections, which were 819 to 536 hence easy to follow.
Revised Slabs and Rebates: More Savings for Taxpayers
It is under the new regime where those people who are gaining up to 12 lakh on a yearly basis may be completely exempted of taxes, as the rebate has also been raised under section 87A. The rebate has been increased to 60,000 as compared to earlier 25,000 which is a huge relief to the middle income earners. Taxpayers who choose the old regime will also have a rebate of 12,500.
The slab rates are re-configured with the motive to promote saving and expenditure. The total income to 4 lakh rupees is tax-free with additional taxes at every higher bracket up to 30 percent of income above 24 lakh rupees. These amendments are focused on seeking a balance between revenue maximization and taxpayer ease.
TDS and TCS: Thresholds and Compliance Made Easier
Significant changes with regard to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) have been introduced through the 2025 rules. Interest-rent and commission thresholds have been increased and this has minimized pressure on small taxpayers. Also, sec. 206AB and 206CCA which creates problems in compliance will not appear after April 2025.
The anonymous donation taxation rate of 30 per cent flat is a point of controversy amongst charitable and religious trusts. The parliamentary panel proposes the replacement of narrower exemptions with broader ones to safeguard hybrid entities, so that a level playing field is provided among the nonprofit organizations.
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