Income Tax: ‘Assessment year’ to become ‘tax year’, govt to table new bill in Lok Sabha tomorrow

The Union government is expected to table the new Income Tax Bill in the parliament on Thursday.

In the Budget 2025-26, Union Finance Minister Nirmala Sitharaman said that she will introduce new Income Tax Bill that will simplify tax-related affairs. It has since been reported that that the Income Tax Bill is the much-awaited direct tax code that has been in the discussion for years.

In her Budget speech, Sitharaman said that Income Tax bill has been made under the “trust first, scrutinise later” framework. She further said that the Income Tax Bill will feature simplified language that will reduce litigation.

“The new bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation,” said Sitharaman.

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The Income Tax Bill 2025 runs into more than 620 pages and has 536 sections, 16 schedules, and 23 chapters.

The CNBC TV-18 has reported sources as saying that the new Income Tax Bill will be tabled in the parliament on Thursday.

Once passed by the parliament, it will come into effect on April 1, 2026, according to the report.

The bill, once it comes into effect, will replace the Income Tax Act of 1961.

CNBC-TV 18 reported sources as alluding that the new Income Tax Bill aims to bring in ease of compliance as new simplified rules will help reduce compliance processes by streamlining paperwork, integrating digital platforms, and simplifying return filing mechanisms.

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The bill proposes to replace the ‘assessment year’ with simpler ’tax year’, according to the report.

The tax year will refer to the 12-month period of the financial year starting April 1, as per the report, which added that the term ‘previous year’ will be replaced by ‘financial year’.

Last week, the bill had been approved by the Union Cabinet chaired by Prime Minister Narendra Modi, paving its way to be tabled in the parliament.