Revised Income Tax Bill: FM Introduces Simplified IT Bill (No. 2), 2025
Revised Income Tax Bill (No. 2) 2025 – Key Highlights
In this post, we will discuss the key highlights of the Revised Income Tax Bill (No. 2) 2025, introduced on August 11th, 2025, by Finance Minister Nirmala Sitharaman. Planned to come into effect from April 1, 2026, the Bill aims to simplify the existing tax laws, update definitions, and modernise compliance in line with today’s economic and technological needs. Let’s look at the key points of the bill.
Key Points of the Bill
- Complete Restructuring of Provisions: The Bill is now clearly divided into chapters, like the basis of tax, how to calculate income, deductions, rebates, capital gains, rules for non-residents, anti-avoidance measures, tax administration, appeals, and prosecution.
- Revised Definitions: Important terms like tax year, capital asset, charitable purpose, and assessee have been redefined to suit today’s business models, online transactions, and global tax practices.
- Capital Gains & Exemptions: Rules are given for different kinds of transactions such as asset distribution, buy-backs, slump sales, and transfers to SEZs, along with clear conditions for exemptions.
- Special Regimes: Separate provisions are made for SEZ developers, start-ups, infrastructure projects, offshore banks, investment funds, and shipping companies under the tonnage tax system.
- Anti-Avoidance Measures: General Anti-Avoidance Rule (GAAR) is included, along with strong transfer pricing rules and limits on tax benefits for certain arrangements.
- Enhanced Compliance & Technology Use: Faceless assessment and information collection, mandatory electronic payment modes, and new reporting obligations for crypto-asset transactions.
- Charitable and Political Funding Rules: New rules for registered non-profits and electoral trusts with stricter checks on commercial activities.
- Penalty & Prosecution Provisions: Full penalty system for under-reporting, wrong reporting, TDS/TCS defaults, and not submitting statements, plus special courts for tax offence cases.
Implementation timeline:
Unless mentioned differently, the rules under the Income-tax (No. 2) Act, 2025 will be effective from April 1, 2026, and will apply for the assessment year 2026-27 onwards. The aim is to replace the old Income-tax Act, 1961, with a simpler and modern law, making it easier for taxpayers to understand and helping the government manage tax collection better.
That’s all about it, and if you have any questions or comments, please leave them in the comment section below, and we will be happy to respond.
