Key Features of the New Income Tax Bill 2025 February 15, 2025 by Shiv Kukreja
Key Features of the New Income Tax Bill 2025
Introduction
The Income Tax Bill 2025 introduces significant reforms aimed at simplifying the tax structure, increasing transparency, and enhancing compliance mechanisms. These changes are designed to provide relief to taxpayers, improve tax administration, and promote economic growth. Below are the key features of the new bill.
1. Revised Tax Slabs and Rates
- Introduction of new tax slabs with reduced rates for individual taxpayers.
- Higher exemption limits to benefit middle-class taxpayers.
- Simplified tax brackets to reduce complexities in filing returns.
2. Enhanced Standard Deduction and Exemptions
- Increased standard deduction for salaried individuals and pensioners.
- Higher exemptions on housing loans and medical expenses.
- Additional deductions for education loans and savings schemes.
3. Rationalization of Corporate Tax Structure
- Reduction in corporate tax rates to encourage business growth.
- Introduction of tax incentives for startups and MSMEs.
- Simplified tax filing process for small businesses.
4. Digital Tax Compliance and E-Filing Enhancements
- Mandatory e-filing for certain categories of taxpayers.
- Enhanced use of Artificial Intelligence (AI) to detect tax evasion.
- Introduction of a simplified online tax payment system.
5. Introduction of Green Tax Incentives
- Tax benefits for investments in renewable energy projects.
- Additional deductions for electric vehicle purchases.
- Incentives for companies adopting sustainable business practices.
6. Revised Capital Gains Tax Rules
- Standardized holding periods for various asset classes.
- Rationalization of capital gains tax rates.
- Relief for long-term investors through indexation benefits.
7. Tighter Anti-Avoidance Measures
- Strengthening of General Anti-Avoidance Rules (GAAR).
- Crackdown on tax havens and offshore tax evasion.
- Increased scrutiny on shell companies and fictitious transactions.
8. Incentives for Digital Transactions and Cashless Economy
- Lower tax rates for businesses promoting digital payments.
- Additional deductions for taxpayers using electronic payment methods.
- Increased transparency in financial transactions through digital records.
9. Simplification of GST and Indirect Taxes
- Streamlining of Goods and Services Tax (GST) procedures.
- Harmonization of indirect tax structures.
- Reduction in compliance burden for small traders and entrepreneurs.
10. Improved Dispute Resolution Mechanisms
- Introduction of a fast-track system for tax dispute resolution.
- Alternative dispute resolution mechanisms to reduce litigation.
- Enhanced taxpayer assistance services for resolving grievances.
