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Income Tax Bill 2025: Will There Be Tax Rates Changes Under New Income Tax Bill? Here's What IT Department Said.....
The Income Tax Department clarified that the new Income Tax Bill, 2025 only aims to simplify the tax law’s language and remove outdated sections, without changing any tax rates or exemptions. This statement was made to counter media rumors about changes to Long Term Capital Gains (LTCG) tax and equity investment benefits. The bill, introduced in February 2025, intends to replace the old Income Tax Act from 1961 with a modern, clearer, and more technology-friendly law. It has undergone detailed review by a Lok Sabha committee and marks the first full rewrite of India’s tax code in decades.
Purpose of the New Income Tax Bill, 2025
The Income Tax Department clarified that the new Income Tax Bill, 2025 is meant to simplify the language used in tax laws and remove outdated or unnecessary provisions. Its main goal is to make the tax law easier to read and understand for taxpayers and officials alike, without changing the existing tax rates or rules.
No Change in Tax Rates
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The department emphasized that the new bill does not propose any changes to income tax rates, including Long Term Capital Gains (LTCG) tax rates. This was to counter media reports claiming that the bill would increase taxes or remove tax exemptions on equity investments, which is not true according to the official clarification.
Addressing Misunderstandings and Concerns
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There were several reports on social media and news platforms suggesting changes in tax slabs or LTCG exemptions. The Income Tax Department has stated that these are misunderstandings and any confusion will be cleared up while the bill goes through parliamentary approval, ensuring there will be no surprise tax hikes.
Background on the New Bill
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The new Income Tax Bill was introduced in the Lok Sabha during the Budget Session in February 2025. It aims to replace the current Income Tax Act of 1961 with a refreshed and modernized version of tax legislation. This overhaul is meant to bring clarity and improve the overall efficiency of tax administration.
The Role of the Lok Sabha Select Committee
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After introduction, the bill was sent to a special committee in the Lok Sabha for thorough examination. This committee has now submitted its report, which will help finalize the bill. This step is important as it ensures detailed scrutiny by lawmakers before the bill becomes law.
Key Goals of the New Legislation
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The new law focuses on streamlining tax provisions and making the language simpler. It also aims to be more technology-friendly, supporting digital filing and compliance. This is expected to make paying taxes easier, faster, and less prone to errors, inviting better compliance by taxpayers.
Significance of the Complete Rewrite
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This is the first time since 1961 that India’s income tax law has been fully rewritten rather than amended. The new bill is a major reform intending to modernize tax law for the digital age, removing complexities, cutting red tape, and making the framework more transparent and accessible for everyone.
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