Clarity & Compliance: India’s New Income Tax Bill 2025—What You Must Know Before It Becomes Law

India’s Parliament has passed the long‑awaited Income‑Tax (No. 2) Bill, 2025, which will overhaul the six-decade-old Income Tax Act of 1961. The bill is now awaiting Presidential assent and is expected to come into effect on April 1, 2026 India Budget+15mint+15Reuters+15Wikipedia+1IndiatimesIndia Today+5mint+5www.ndtv.com+5.

What’s New — Key Highlights at a Glance

• Tax Year Consolidation: Replaces the old “Assessment Year” and “Previous Year” with a single Tax Year for easier understanding.
• No Change in Tax Rates: Existing slabs remain the same; focus is on simplification and compliance ease.
• ₹12 Lakh Exemption Retained: Annual basic exemption limit stays at ₹12 lakh for middle-income earners.
• Code Consolidation: Sections reduced from over 800 to 536 and chapters from 47 to 23 for a leaner tax law.
• Faceless, Digital-First Assessments: Reduces physical interface, increasing transparency and reducing corruption risks.
• Faster Refunds & Mandatory Prior Notice: Refunds can be issued even after ITR deadlines; tax authorities must notify before enforcement.
• Limit on Anonymous Donations: Puts a cap on untraceable donations to religious trusts not engaged in social service.
• Inclusion of Virtual Digital Assets: Expands “undisclosed income” definition to include crypto, jewellery, bullion, and other assets.
• Digital Access by Authorities: Allows access to taxpayers’ emails, online accounts, and social media—raising privacy concerns.

Why It Matters

• Simpler Law = Lower Compliance Costs: Sharpened language and structure make tax navigation clearer for professionals and laypersons alike.
• Tech‑Driven Efficiency: Faceless assessments could slash red tape and curb bribery.
• Fairer Treatment: Refunds without penalties and mandatory notices give relief to those missing deadlines.
• Transparency Boost: Donations and digital assets now under scrutiny, helping curb misuse and tax evasion.
• Start Date Clarity: Assuming the president signs it soon, the law would kick in from April 1, 2026 The Times of IndiaThe Times of India+4PRS Legislative Research+4Indiatimes+4Wikipedia+2Indiatimes+2mint+2Upstox - Online Stock and Share Trading+2.

4. Noteworthy Controversy

Despite its overhaul ambitions, the bill’s passage was marked by a glaring absence of dialogue: the Lok Sabha passed it without debate, prompting Finance Minister Sitharaman to publicly express her shock at the lack of opposition participation India Today+1. Critics argue such sweeping reforms deserve thorough deliberation in a democracy.

What’s Next?

• Presidential Assent: Awaiting sign‑off from President Droupadi Murmu.
• Effect Date: Expected to come into enforcement on April 1, 2026 mint.
• Stakeholder Preparation: CA and tax professionals should review structural changes now—especially concerning digital assessments, refund processes, and privacy implications.

Bottom Line — What Should You Know?

• A modern, streamlined tax code is on the horizon.
• No changes to your tax rates or slabs, but improved navigation and clarity.
• Digital infrastructure is at the core—embrace it.
• Privacy debates may follow—stay informed.
• Mark your calendar: April 1, 2026 is the new normal.