Be Ready in 2025, New Income Tax 2025 is coming | New income tax Act 2025 changes

Summary

In this video, CA Pooja introduces the key updates in the proposed Income Tax Act 2025, which aims to replace the outdated Income Tax Act 1961. She discusses the simplifications, including the restructuring of sections, the introduction of the tax year concept, and changes in tax definitions and rates. She also highlights the upcoming tax slabs and provisions proposed in Budget 2025. Additionally, CA Pooja promotes CA Guruji’s website, offering practical accounting and taxation courses, along with free daily articles to help professionals stay updated on the latest tax laws and regulations.

Takeaways

• 😀 The Income Tax Bill 2025 is set to replace the Income Tax Act of 1961 once it receives presidential assent and will come into force on April 1, 2026.
• 😀 The new Income Tax Act is significantly shorter than the previous Act, though it still contains 622 pages and over 500 sections, up from 2980 sections in the 1961 Act.
• 😀 The Bill aims to simplify the Income Tax system by reducing the number of sections and making key changes in the definitions and provisions, such as those related to the tax year.
• 😀 A major change in the new Act is the introduction of the term 'Tax Year', which will be used consistently across the Act, replacing terms like 'Assessment Year' and 'Financial Year'.
• 😀 The Bill includes updates to the tax rates, such as new capital gains rates proposed in the 2024 Budget, which will be included in the Act once it is passed.
• 😀 Despite rumors, the new Act does not expand audit powers to other categories of professionals beyond Chartered Accountants (CAs), and CAs will retain exclusive audit powers.
• 😀 The Act outlines that agriculture income will still not be subject to tax, addressing previous concerns about this issue.
• 😀 A key provision of the new Act is the simplification of tax procedures and the removal of outdated language to address complex interpretation issues and litigation matters.
• 😀 The new Income Tax Bill aims to update and streamline the legal framework to reflect modern needs, replacing the outdated 1961 Act with provisions suited for contemporary tax administration.
• 😀 The CA Guruji platform provides various courses related to GST, Income Tax, accounting, and more. It offers both free articles and premium courses to help users enhance their knowledge and skills.

Q & A

What is the primary purpose of the Income Tax Bill 2025?

The primary purpose of the Income Tax Bill 2025 is to replace the outdated Income Tax Act of 1961 with a more modern, streamlined tax framework. The new bill aims to simplify tax procedures, clarify definitions, and address current legal and taxation challenges.

When will the Income Tax Bill 2025 come into effect?

The Income Tax Bill 2025 will come into effect on April 1, 2026, marking the start of the new financial year.

How many pages and sections does the Income Tax Bill 2025 contain?

The Income Tax Bill 2025 contains 622 pages and over 500 sections. This is a significant reduction from the previous act, which had 2,980 sections.

What is the key change regarding the terms 'Assessment Year' and 'Financial Year' in the new Income Tax Bill?

The term 'Assessment Year' has been replaced by 'Tax Year' in the new Income Tax Bill 2025. The bill now uses the term 'Tax Year' to refer to the 12-month period starting on April 1 for most cases or from the date a new business or source of income is set up.

Are the tax rates in the new Income Tax Bill 2025 the same as those proposed in Budget 2025?

Yes, the tax rates in the Income Tax Bill 2025 remain the same as those proposed in Budget 2025, including the capital gains rates.

Has the new Income Tax Bill made any significant changes to the auditing powers of professionals?

No, the new Income Tax Bill has not changed the auditing powers. Chartered accountants (CAs) will still hold the authority for auditing, and no other categories such as CMAs have been included for audit powers.

What is the main challenge that the new Income Tax Bill 2025 seeks to address?

The main challenge the new bill seeks to address is the outdated provisions and the complexity of the Income Tax Act of 1961, including issues with interpretation and litigation in various tax matters.

What new definitions are introduced in the Income Tax Bill 2025?

The Income Tax Bill 2025 introduces new definitions, including a clearer definition for 'Tax Year' and updates to various sections like accounting definitions. These changes are aimed at reducing confusion and simplifying the tax process.

How does the new Income Tax Bill 2025 address the needs of businesses and professionals?

The new Income Tax Bill 2025 is designed to better cater to modern businesses and professionals by simplifying tax regulations and offering clearer guidelines, which can help reduce complexities in tax filing and litigation.

What does the website c.guruji.com offer to professionals in the tax and accounting fields?

The website c.guruji.com offers a variety of online courses on topics like Income Tax, GST, Accounting, and other financial subjects. These courses are designed to help professionals improve their knowledge and skills, enabling them to secure higher job positions or grow their practices.