What Does Not Change in the New Income Tax Bill 2025?

The government introduced the Income-Tax (No. 2) Bill, 2025 in the Lok Sabha on August 11, 2025, to replace the 6 decade old Income-Tax Act, 1961. This Bill replaces the February 2025 draft that was reviewed by a Select Committee chaired by Mr. Baijayant Panda.

The revised version incorporates the committee’s recommendations but keeps much of the old law intact. While the Bill simplifies language, removes redundant provisions, and proposes April 1, 2026, as the commencement date, the core structure of the 1961 Act remains largely unchanged.

What Remains the Same in the New Income Tax Bill?

1. Tax Rates and Regimes: Individual and corporate tax rates, along with existing regimes, remain unchanged.
2. Definitions: Most key definitions under the 1961 Act are retained.
3. Offences and Penalties: There are no changes to the list of offences or the penalties applicable.
4. Tax Administration Structure: The organisational and procedural framework for tax administration remains the same.

Income Tax Bill 2025 Retained Provisions with Minor Additions

1. Power to Frame Schemes

The current law already allows faceless collection of information and assessment of cases, along with faceless mechanisms for inquiry, valuation, order revision, and tax recovery.

The Bill keeps these provisions but grants the central government broader powers to frame new schemes for efficiency, transparency, and accountability. These schemes will still need parliamentary approval, as per PRS Legislative Research report.

2. Virtual Digital Space in Search and Seizure

The existing power to inspect physical and electronic documents remains.

The Bill adds explicit powers for tax authorities to access virtual digital spaces such as email servers, social media accounts, online trading accounts, or asset ownership websites by overriding access codes when conducting searches, the report added.

3. Dispute Resolution Panel

The existing option for eligible assessees (including transfer pricing cases, non-residents, and foreign companies) to refer draft assessment orders to a dispute resolution panel is retained.

As per the PRS report, the Bill adds that the panel’s directions must include points of determination and the reasons for its decisions.

Read More: Income Tax Bill 2025: No Penalty on Late TDS Filing Under the New Income Tax (No 2) Bill.

Conclusion

The Income-Tax (No. 2) Bill, 2025 is not a complete departure from the 1961 Act it’s more of a refinement. While it makes the law easier to read and introduces some procedural enhancements, taxpayers will see no change in rates, penalties, or the core compliance structure.

The focus is on clarity, efficiency, and adapting to modern realities such as virtual digital spaces, without disrupting the foundational framework of India’s income tax system.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.