The income tax bill, 2025, which should replace the six -decades income tax law, 1961, provides significant refinements to the tax framework of India.
However, unlike the proposals of the 2009 and 2010 Direct Tax (DTC) code (DTC), which requested a complete tax overhaul, the new bill largely preserves the existing structure while introducing key updates.
The idea of a DTC was introduced for the first time in 2009 to replace the law of 1961 income tax, by a more simplified and uniform tax framework.
The DTC Bill, 2010, proposed major changes, including uniform tax slabs, a tax rate of lower companies and a rationalized approach to capital gains. However, concerns about loss of income, resistance to investors in capital gains reforms and opposition to stricter anti-avoidance measures have led to repeated delays.
With the change of government in 2014, the emphasis went to additional reforms rather than a complete overhaul, and the DTC has never been implemented. Instead, successive budgets have introduced tax changes within the framework of the existing law, leading to the income tax bill, 2025.
The DTC aimed at simplifying tax laws by offering uniform tax slabs, a corporate tax rate of 25% and a large -scale tax structure. The income tax bill, 2025, while modernizing tax legislation, retains a progressive tax regime with revised slabs and deductions. The taxation of companies remains largely unchanged, although incentives for specific industries are introduced.
A crucial change is in the administration – while the electronic deposit proposed by the DTC, the new bill favors facial without facials and digital compliance with the corruption of the sidewalk.
Likewise, the taxation of foreign entities sees refinements rather than the introduction of controlled rules of foreign companies (CFC), which were part of the DTC.
The imposition of capital gains remains a key difference. The DTC requested uniformity between the asset classes, while the new bill continues to distinguish the different types of investment, by maintaining the indexed advantages.
The general anti-avoid rule (GAAR) is preserved but with refinements for effective implementation. The rules of residence also see updates, especially for non -resident Indians (NRI).
The imposition of the digital economy is another major update – while the DTC lacked specific provisions, the new bill introduces taxation for crypto -actives and digital transactions.
In fact, the new bill defines “Virtual digital asset (VDA) as any digital representation of value, excluding traditional currencies, which can be transferred, stored or exchanged electronically. This includes cryptocurrencies, non-bubble tokens (NFT) and other digital assets specified by the government. VDAS operate as a reserve of value, an account unit or an investment tool, based on cryptographic technologies or similar for safety and validation. “”
The government should soon introduce the income tax bill, 2025, replacing the 1961 income law. The new legislation, provided for in force on April 1, 2026, aims to simplify tax structures , to improve compliance and to slow down tax evasion.
