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Income tax bill 2025: reforms you need to know

The 1961 Income Tax Act, which has been in effect for the past six decades, will now be replaced by the New Income Tax Bill of 2025, introduced by Parliament.

For both individuals and businesses, the act's new changes aim for a simpler, more understandable, and more transparent income tax law that provides more clarity on the tax system.

Let’s have a quick breakdown of the changes that have been made to the Income Tax Bill.

Reforms made for Individual Taxpayers:

  • Search & Digital Access

    • Earlier: Tax officers could inspect only physical books, papers, or devices during search and seizure.

    Now: Officers are allowed access to check emails, social media accounts, electronic documents, and even request passwords or privacy codes. The law now covers all digital records.

  • House Property Deductions

    • Earlier: No pre-construction interest deduction on let-out properties.

    Now: Pre-construction interest deduction is now allowed on let-out properties, giving individual property owners more tax relief.

  • Pension and NO TCS Education Loans

    • Pension deductions apply to non-employees and family members too. Commuted or lump-sum pensions from approved funds are covered.

    ‘Nil’ TCS on overseas education expenses through loans from banks or financial institutions.

Reforms made for Corporate Taxpayers:

  • Beneficial Owner

    • Earlier: Ambiguities about the ultimate owner of shares.

    Now: The bill provides clarification on beneficial ownership rules, removing previous ambiguities about the ultimate owner of shares.

  • Alternate minimum tax

    • Earlier: The Alternate Minimum Tax (AMT) for LLPs was capped at 18.5%.

    Now: It is clarified and reinstated to 12.5%.

Income tax bill 2025: reforms you need to know

Conclusion:

The Income Tax Bill 2025 is one of the biggest reforms in decades, bringing a balance of clarity and relief for taxpayers. But keeping track of these new reforms can be complex and confusing.

That’s where Tax360 comes in. Our expert team helps you:

  • File your returns accurately and on time seamlessly.
  • Maximize your refunds and deductions.
  • And stay updated with every new rule and reform.