A Comparative Study on the Old and New Tax Bill

Efforts are made to simplify the explanations by providing certain parts of the wordings of the provision in table format in the New Tax Bill.

2. Elimination of the Concept of Assessment Year

Section 3 of the New Tax Bill defines Tax Year as the 12 months period of the financial year commencing on April 1.

In the previous Act the Concept of Previous Year and Assessment was prevalent requiring the Taxpayers to keep in track for 2 years.

For the newly established Businesses or New Income the Tax Year shall be :

i) the date of setting up of such business or profession; or

ii) the date on which such new source of income comes into existence

The Year End shall remain the same as the financial year ending.

3. Provisos, Explanations and Procedures

More than 1200 Provisos and 900 explanations have been removed and replaced with simplified subsections or clauses.

4. Digital Assets and Updated Tax Guidelines

As the digital economy continues to expand, the Bill addresses the taxation of digital assets, including cryptocurrencies and income generated through online platforms. Virtual Digital Assets has been defined in Clause 2 of the New Bill, providing proper tax structure for the VDAs.

5. Filings and Due Dates

For filing updated returns the New Bill provides a time frame for four years for correction of returns, where the prior Act provides only 2 years. The extension ensures better compliance by the taxpayers.

6. Startup Focused

Clauses 11 to 154 introduce measures to support new businesses, including startups including startups involved in renewable energy. This provides tax break ups and incentives encouraging innovation and sustainable development.

7. Withholding tax rates on various payments to non-residents tabulated

Currently, section 115A of the Income-Tax Act provides for the applicable tax rates on certain payments to non-residents such as towards royalties, fees for technical services, dividends, interests etc., and the rates applicable is 20% under the old Tax Act (subject to the benefit available under the DTAA).

In the Income-Tax Bill 2025, similar provisions have been covered in section 207 in tabular format for ease of reference. There is no change in the tax rate structure.