Comprehensive Comparison of the Income-tax Act,
1961 and Income-tax Bill, 2025
cabkgoyal.com/new-income-tax-act-2025-vs-old-income-tax-act-1961
February 12, 2025
1. Structural and Conceptual Changes
The Income-tax Bill, 2025 aims to simplify and modernize the Income-tax Act,
1961, while aligning with global best practices.
The language is simplified, and redundant provisions are removed.
The Bill organizes provisions logically to improve clarity and ease of
interpretation.
2. Key Differences in Approach
Aspect Income-tax Act, 1961 Income-tax Bill, 2025
Terminology Uses older definitions and Introduces new terms like “tax
outdated terminologies. year” and modernizes
definitions.
Tax Structure Fragmented tax provisions Consolidates related provisions
across various sections. for easier interpretation.
Tax Manual and physical-based Full implementation of
Administration assessments with faceless faceless assessment, e-filing,
assessment introduced later. digital compliance measures.
Deductions & More scattered, with various Streamlined and grouped
Exemptions exemptions listed under different logically for clear
sections. understanding.
International Limited scope for international Stronger GAAR, BEPS
Taxation compliance. provisions, expanded transfer
pricing rules.
3. Detailed Section-wise Comparison
Income-tax Income-tax
Act, 1961 Bill, 2025
Provision (Section) (Clause) Major Changes
Short Title & Sections 1-3 Clauses 1-3 Introduces “tax year” concept.
Definitions
Charge of Sections 4-5 Clauses 4-5 Clarifies scope of total income
Income Tax and tax liability.
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Income-tax Income-tax
Act, 1961 Bill, 2025
Provision (Section) (Clause) Major Changes
Residence Section 6 Clause 6 Minor modifications for better
Status clarity.
Income Section 9 Clause 9 Expands definition of income for
Deemed to better anti-tax avoidance
Accrue in India measures.
Income Not Section 10 Clauses 11- Consolidates exemptions, adds
Part of Total 12 electoral trust exemption.
Income
Salaries Sections 15- Clauses 15- No major changes, but language
17 19 is modernized.
Income from Sections 22- Clauses 20- Similar, but reorganized for clarity.
House 27 25
Property
Profits & Gains Sections 28- Clauses 26- Presumptive taxation expanded,
of Business 44 66 simplified deductions.
Depreciation Sections 32- Clauses 33- More detailed depreciation rules
34 34 for consistency.
Foreign Sections 43A, Clauses 42- Expanded provisions on foreign
Exchange 43AA 43 currency gains/losses.
Adjustments
Capital Gains Sections 45- Clauses 67- New rules for Market Linked
55 91 Debentures, slump sales.
Set-off & Carry Sections 70- Clauses 108- Simplified approach, clear
Forward of 80 121 treatment of business losses.
Losses
Deductions & Sections 80A- Clauses 122- Revised deductions for EVs,
Exemptions 80U 154 Agnipath scheme, digital
transactions.
Transfer Sections 92- Clauses 161- Expanded transfer pricing
Pricing 92F 173 provisions for international tax
compliance.
Minimum Sections Clauses 206- MAT calculations streamlined,
Alternate Tax 115JB, 115JC 208 relief for startups.
(MAT)
Faceless Tax Section 144B Clauses 273- Fully integrates faceless
Administration 275 assessments, appeals, and ITAT
proceedings.
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Income-tax Income-tax
Act, 1961 Bill, 2025
Provision (Section) (Clause) Major Changes
Digital Section Clauses 185- Strengthens e-payment norms,
Payments & 269SU 188 mandatory digital modes.
Compliance
Tax on Non- Sections Clauses 207- Expanded provisions for non-
Residents 115A-115H 219 residents, foreign companies.
Special Anti- Sections 94A, Clauses 174- GAAR provisions tightened, tax
Tax Avoidance 95-102 184 avoidance rules expanded.
Tax Sections 116- Clauses 236- Faceless compliance &
Administration 138 261 automation for better efficiency.
Assessment & Sections 139- Clauses 263- Time limits revised, e-processing
Reassessment 154 291 of reassessments.
Dispute Section 144C Clauses 275- New Dispute Resolution
Resolution 279 Committee, faceless appeal.
Penalties & Sections 271- Clauses 439- Stricter penalties for non-
Prosecutions 276 460 compliance, TDS defaults.
Refunds Sections 237- Clauses 431- Faster e-refunds, automated tax
245 438 adjustments.
4. Major Policy Shifts in the Income-tax Bill, 2025
A. New Deductions & Incentives
1. Deduction for Purchase of Electric Vehicles (Clause 132)
2. Deduction for Agnipath Scheme Contributions (Clause 125)
3. Revised Donations & Political Contribution Rules (Clauses 133-137)
B. Digital & Faceless Administration
1. Mandatory e-filing & digital processing for all taxpayers.
2. Faceless tax assessments, audits, appeals, and ITAT hearings.
3. Automated tax collection, refunds, and notices.
C. International Taxation & Anti-Avoidance Measures
1. Expansion of Transfer Pricing (Clause 161-173).
2. Tighter GAAR rules (Clause 174-184).
3. Taxation of foreign income & expanded BEPS rules.
D. Changes in Capital Gains Taxation
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1. Market Linked Debenture taxation introduced (Clause 76).
2. Slump sale tax rules revised (Clause 77).
3. Better cost indexation mechanism for property sales (Clause 89).
5. Conclusion: Expert Opinion
The Income-tax Bill, 2025 represents the biggest overhaul since 1961.
Easier compliance, faster processing, and digitization make it taxpayer-friendly.
Stronger anti-tax avoidance provisions will tighten loopholes for evaders.
More deductions & incentives encourage investment in green energy,
infrastructure, and digitization.
The transition from the 1961 Act will require robust implementation and
taxpayer education.
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