Govt to replace the income tax law for the year 1961 with a new income tax bill from April 2026

The government is scheduled to submit the income tax bill, 2025, which is a comprehensive renewal of tax laws in India, to replace the income tax, 1961. Structures, promotion of compliance, and tax evasion.

The draft law offers 16 timetables and 23 chapters, compared to 14 timetables in the current law, and restructuring sections to improve clarity.

The taxable income, the status of the accommodation, the sources of income, salary coverage, business profits, capital gains, and foreign profits are determined. Exemptions from charitable funds and political parties remain, while discounts were set on salaries, rent and employee care expenses.

The main advantage of the new tax law is to restructure the department to make tax provisions easier and easier to understand the taxpayers. The draft law also provides evaluation and unidentified conflict resolution mechanisms, which reduces bureaucratic delay and human intervention.

Tax compliance will become more simplified with compulsory electronic deposit, expanded tax audit requirements and digital documents. GAAR (GAAR) base has been strengthened, along with tougher transportation lists to monitor cross -border transactions and prevent taxes.

The draft law is expected to delete signals to the old tax system, which makes the new tax system to be the formal failure. However, taxpayers can still choose the old tax system if they choose it.

Focusing on digital compliance, transparency and effective tax management, the income tax bill, 2025, represents a major shift in the framework of taxes in India.