New Income Tax Bill 2025 To Introduce ‘Tax Year’: Know Key Details

The new Income Tax Act proposed by the Ministry of Finance, 2025, aims to introduce the concept of a “tax year” to replace the existing “assessment year” and “previous year”. According to the Income Tax Act of 1961. The bill was announced on February 1, 2025 during the league’s budget introduction and is expected to be introduced in Parliament in the third week of February. This new tax law will apply to all regions of India. The introduction of the concept of “tax year” is intended to simplify the tax filing process by replacing the multiple terms currently used, and this change is intended to clarify the duration of taxes, income tax filing applications, and other eligibility periods required by the income tax bill, 2025.

What is the tax year under the new bill?

Under the Income Tax Act 2025, the tax year is defined as twelve months, starting from April 1 and ending on March 31 of the following year. This is consistent with the existing fiscal year structure. However, for newly formed businesses or sources of income, the tax year will start with the following:

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1. Date of establishing a business or career
2. Date of existence of new revenue sources

The tax year for these cases will end on March 31 of the same fiscal year.

Highlights of the tax year concept

• Simplify tax compliance: Remove clauses such as “Assessment Year” and “Previous Year” are designed to reduce taxpayer confusion.
• Global consistency: Many countries use similar tax year concepts, making international tax and financial reporting easier.
• Continuity of fiscal year: Despite the change in terms, the fiscal year is still between April 1 and March 31.
• Reduce tax filing errors: Eliminating complexity associated with the assessment year will help taxpayers submit returns accurately and avoid unnecessary tax disputes.

How does the new Income Tax Act simplify the legal framework in 2025?

The new bill has eliminated redundancy regulations, reducing the time for tax legislation from 823 to 622 pages. The number of chapters remains unchanged when it remains at 23, but the section increases from 298 to 536, providing a clearer structure. The timetable has also been increased from 14 to 16 to ensure better classification of exemptions and deductions.

Current income tax system and new tax bills

aspect	Current System (Income Tax Act 1961)	New Tax Act 2025
Tax year	Use assessment year and previous year	Use single tax year
start date	April 1 (Financial Year)	April 1 (Financial Year)
End date	See more : Optical Illusion Eye Test: If you have Sharp Eyes Find the number 17 in 15 Secs March 31 next year	See more : Optical Illusion Eye Test: If you have Sharp Eyes Find the number 17 in 15 Secs March 31 next year
For new business	Follow the concept of the previous year	From the date of establishment

Existing system challenges

Currently, taxpayers in India follow an annual assessment system, which refers to the year after the fiscal year of income. Many individuals and businesses face confusion when submitting returns due to:

• Assessing misunderstandings in annual and fiscal years
• Tax errors resulting in refunds and fines
• Complexity of advance tax and self-assessment tax

The new tax bill aims to address these issues by introducing a direct tax year concept.

What impact will it have on taxpayers?

Starting with the new income tax bill in 2025, taxpayers including individuals, businesses and governments have been affected only in the same few years. For individuals, the tax returns filed will become more intuitive because the income earned in the fiscal year will be evaluated in the same tax year. Businesses like those looking for startups and newly registered businesses will find tax years easier because their tax year will start with the establishment date and end on March 31, and for the government, streamlined approaches will be improved Tax management efficiency and reduce errors in taxation and handling.

in conclusion

The 2025 Income Tax Act marks an important step in simplifying the tax law. By eliminating the complex distinction between the assessment year and the previous year, it is expected that the introduction of a single tax year concept will increase taxpayer compliance and alleviate the tax filing process. Although the fiscal year remains the same, this shift will make both individuals and businesses more user-friendly and transparent.

Source: https://dinhtienhoang.edu.vn
Category: Optical Illusion