After 60 years, Parliament approves the new Income Tax Bill 2025, which will replace the 1961 Act.

The 1961 IT Act is replaced by a new income tax bill passed by parliament. The outdated, six-decade-old income tax law will be replaced by the Income Tax Bill once it is passed. By cutting down on the number of chapters and wording, the act will simplify tax law.

In barely three minutes, the Lok Sabha approves a new income tax bill.

The 63-year-old legislation governing income taxation for people and corporations will be replaced by the Income Tax Bill (No.2) 2025, a significant legislative move that was passed in the Lok Sabha on Monday in just three minutes without any debate.

As the opposition parties persisted in interfering with proceedings over claims of irregularities in the special intensive revision, the Bill was passed. It streamlines TDS, exemptions, and other compliance-heavy provisions and permits individuals to claim refunds without penalty on delayed filings.

After withdrawing the Income Tax Bill, 2025 she had submitted in February on August 8, Finance Minister Nirmala Sitharaman on Monday introduced an amended version that included suggestions from a parliamentary panel that examined the law. The bill was put to a vote and passed by a voice vote despite the opposition’s yelling of slogans.

After being approved by the Rajya Sabha, the Bill would be transmitted to the President for his or her assent. As soon as the president gives his approval, it will become law.

The present Income Tax Act is made smaller and less complicated by the new bill, which virtually halved its word count and significantly reduced the number of useful parts and chapters.

“Almost all of the recommendations of the Select Committee have been accepted by the Government. In addition, suggestions have been received from stakeholders about changes that would convey the proposed legal meaning more accurately,” said the statement of Objects and Reasons of the Income Tax (No.2) Bill.

It replaces the difficult-to-understand terms “assessment year” and “previous year” with the simpler term “tax year.” The amended Bill states that people can still get a TDS refund even if they file their income return after the deadline specified by law for completing the initial income tax return.

Therefore, the provision of the current Income Tax Act, 1961 has been incorporated by the Finance Ministry. TCS on Liberalized Remittance Scheme (LRS) remittances for educational purposes funded by any financial institution is set at ‘zero’ under the Income Tax (No. 2) Bill.