Govt answers all FAQs on new Income Tax Bill: ‘60,000 man-hours spent on it’

The government has shared a list of frequently asked questions that taxpayers may pose after reading the Income Tax Bill 2025. Read on to know what they are.

The government has answered a list of the most frequently asked questions (FAQs) regarding the Income Tax Bill 2025. The new bill, which will replace the decades old Income Tax Bill 1961, was tabled in the Lok Sabha by Finance Minister Nirmala Sitharaman on February 13.

Read on to know what FAQs the government has answered about the new Income Tax Bill 2025

An unconfirmed number of Opposition MPs had staged a walkout after the bill was tabled. However, Sitharaman continued with addressing concerns regarding the bill and eventually suggested it be sent to a House committee.

What do we know, what have we learnt?

1. There are no changes in the bill over the existing act with respect to rates.
2. The bill contains all amendments proposed in the Finance Bill 2025.
3. The government clarified that while drafting the new bill, the committee made use of lessons from similar processes carried out by UK and Australia between 1994 and 2010.
4. The new bill has one other significant difference which makes it more concise and simpler to follow for taxpayers. About 1,200 provisos, or conditions that must be accepted before an agreement can be made, have been eliminated from the new bill.
5. Another major difference is in the reading the bill. As compared to the old Act, which contained various cross-references to sections, sub-sections, clauses, sub-clauses, items and sub-items, the new bill adopts a simplified reference system. It simply cites provisions by mentioning the concerned sections.

For instance, section 133 (1)(b)(ii) in the new bill would indicate sub-clause (ii) of clause (b) of sub-section (1) of section 133 in the existing act.

The new bill also eliminates the concepts of ‘previous year’ and ‘assessment year’ and replaces them with the concept of ‘tax year’. The two terms had been added because the taxpayers could have different twelve-month previous years for each source of income. From 1st April 1989, previous year was aligned to a financial year in all cases. However, ‘assessment year’ continued to be used for various proceedings under the Act.

A total of 150 officers of the Income Tax Department were involved in drafting the new bill. The drafts of different chapters was then vetted by the Law and Justice Ministry of the Government of India. The team dedicated more than 60,000 man-hours in finalising the new bill.

The bill has consolidated all provisions relating to salaries employees for ease of understanding. Deductions like gratuity, leave encashment, commutation of pension and compensation on VRS have been made a part of the salary chapter itself.