Income Tax: Will April Salary Be Taxed Under New Bill Or 1961 Act?
The bill seeks to simplify tax compliance and introduce easier terminologies.
The new financial year came into effect on April 1, introducing a host of changes to the financial rules and regulations in India. A key change introduced in this financial year is the launch of more favourable tax slabs under the new income tax regime.
The changes make an annual income of up to Rs 12 lakh completely tax-free. For salaried individuals, this threshold stands at Rs 12.75 lakh with a standard deduction of Rs 75,000. The move aims to ensure more disposable income for the taxpayers and greater flexibility with finances.
The changes to the tax slabs were announced by Finance Minister Nirmala Sitharaman in the Union Budget in February. During the same session, Sitharaman had also introduced the new Income Tax Bill, 2025, which seeks to replace the existing taxation laws in India.
The bill seeks to simplify tax compliance and introduce easier terminologies. While it will replace the Income Tax Act of 1961, the bill largely retains the provisions of the current act for stability.
The new bill will not have language such as assessment year and previous year and instead use phrases like tax year to simplify language for improved understanding.
However, its introduction has also caused some confusion among taxpayers, as they wonder whether their income in the new financial year will be taxed under the old tax laws or the newly introduced bill by the finance ministry.
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Will April Salary Be Taxed Under New Bill?
Taxpayers should take note that the new income tax bill is yet to become law. Currently, a 31-member Lok Sabha panel is reviewing the contents of the bill. The panel, headed by Bharatiya Janata Party MP Baijayant Panda, also features Congress' Deepender Singh Hooda, Trinamool Congress' Mohua Moitra, BJP's Bhartruhari Mahtab and Naveen Jindal. Following its review, the panel is expected to submit its report on the new bill by the first day of the Parliament's Monsoon session.
According to the contents of the bill, described in over 600 pages, the legislation will come into effect on April 1, 2026. This means that the income and transactions made in the current fiscal will continue to be governed under the Income Tax Act, 1961.
