New Income Tax Bill, 2025 — When Will It Become Law and What It Means for You

New Income Tax Bill, 2025 — When Will It Become Law and What It Means for You

India’s tax landscape is on the verge of its biggest overhaul in over six decades. The Income-tax (No. 2) Bill, 2025 has cleared both houses of Parliament and is now awaiting the final step before becoming law. Here’s everything you need to know—dates, process, and what comes next.


📜 The Journey So Far

The new Bill aims to replace the Income-tax Act, 1961, which has been the backbone of India’s direct tax framework for more than 60 years.
Here’s the timeline of its progress:

Stage Date / Status
Passed by Lok Sabha August 11, 2025
Passed by Rajya Sabha August 12, 2025
Presidential Assent Pending
Scheduled Effective Date April 1, 2026

The Bill’s smooth passage through Parliament reflects strong government backing. However, like every law, it can only take effect after receiving the President’s assent.


🗓 When Will It Become an Act?

Technically, a Bill becomes an Act only after the President signs it into law.

  • As of mid-August 2025, this step has not yet happened.

  • Once assent is granted, the Income-tax Act, 2025 will be officially on the statute books.

The government has already stated that the law will commence from April 1, 2026—aligning with the new financial year. This gives taxpayers, businesses, and professionals time to adapt.


💡 Why Replace the 1961 Act?

The 1961 Act has been amended hundreds of times, creating a maze of provisions, exceptions, and special cases. The 2025 Act aims to:

  • Simplify the language and structure of the tax law.

  • Modernise provisions to match today’s economic realities.

  • Reduce disputes by making rules clearer.

  • Digitise compliance for ease of filing and reduced paperwork.


🔍 What Happens Next?

  1. Presidential Assent → The last formal step before it becomes law.

  2. Notification & Rules → The government will issue detailed rules, forms, and clarifications.

  3. April 1, 2026 Rollout → New tax slabs, definitions, and compliance mechanisms take effect.


📝 Key Takeaway

  • The new Income-tax Bill, 2025 is not yet law, but it’s almost there.

  • It is set to replace the 1961 Act from April 1, 2026.

  • Everyone—from salaried employees to big corporations—will see changes in how taxes are computed and filed.


Final Word: If you’re a taxpayer, now is the time to start familiarising yourself with the upcoming provisions. Early awareness can help you make better investment and tax planning decisions before the switch.


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