New Income Tax Bill: From Simpler Language To Extension For Filing Returns, Here Are Top 10 Highlights

The bill uses simple language to help reduce tax litigation. The simplified language will benefit taxpayers and the tax department equally as it removes redundant provisions or sections like Fringe Benefit Tax and uses shorter sentences. In addition, the bill is free from 'explanations or provisos', making it easier for reading.

The bill has not introduced any new taxes but has only put together the taxability provisions provided in the previous act. As per the announcement during the budget, income up to Rs 12 lakh is now exempt from taxation, with a standard deduction of Rs 75,000, effectively making income up to Rs 12.75 lakh tax-free for salaried individuals.

The newly tabled bill is 622 pages long with 536 sections, 23 chapters and 16 schedules. The bill simplifies the existing languages of the existing Income Tax Act of 1961. The earlier tax act had 298 sections and 14 schedules.

The new law will come into effect from April 2026 and the rules will come to place once the act is notified.

The time frame for filing updated returns is extended from two years to four years. This provides taxpayers with an extended period to rectify any omissions or errors.

The new bill has omitted words like 'previous year' and 'assessment year' and introduced the concept of 'tax year', which will indicate a 12-month period.

The new bill has introduced a taxpayers charter that outlines rights and obligations of taxpayers and their rights.

The new tax bill includes special provisions for capital gains computation in case of market-linked debenture.

In addition, the deductions in salaries that include standard deduction, gratuity and leave encashment will be tabulated at one place. Earlier, it was scattered over different sections or rules.

As per the proposed act, the employees' stock options have been clarified and included to reduce tax disputes and it also includes pronouncements of the last 60 years for more clarity.