{"id":8212,"date":"2025-08-11T14:06:06","date_gmt":"2025-08-11T14:06:06","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?p=8212"},"modified":"2025-08-11T14:06:08","modified_gmt":"2025-08-11T14:06:08","slug":"income-tax-bill-2025-passed-key-changes","status":"publish","type":"post","link":"https:\/\/lemonn.co.in\/blog\/finance\/income-tax-bill-2025-passed-key-changes\/","title":{"rendered":"The Income-Tax Bill, 2025: How India\u2019s Biggest Tax Reform in 60 Years Could Affect Your Money"},"content":{"rendered":"
\"\"<\/figure>\n\n\n

On August 11, 2025<\/strong>, the Lok Sabha passed the Income-Tax Bill, 2025<\/strong>, which will replace the old 1961 Act from April 1, 2026. The goal? Simpler rules, lower taxes for many, and a more digital, transparent system. Whether you\u2019re a salaried professional, a business owner, or an investor, this bill will change how you plan your finances.<\/p>\n\n\n\n

Why a New Tax Law Was Needed<\/h2>\n\n\n\n

For over six decades, the Income-Tax Act, 1961 grew into a 5-lakh-word tangle of amendments. It was complicated, costly to comply with, and often led to disputes. The 2025 Bill aims to:<\/p>\n\n\n\n

    \n
  • Simplify language<\/strong> and remove outdated sections<\/li>\n\n\n\n
  • Reduce litigation<\/strong> through clearer rules<\/li>\n\n\n\n
  • Go digital-first<\/strong>, with more faceless assessments<\/li>\n\n\n\n
  • Unify the tax year<\/strong>, ending confusion between \u201cprevious\u201d and \u201cassessment\u201d years<\/li>\n\n\n\n
  • Make compliance easier<\/strong> for individuals and businesses<\/li>\n<\/ul>\n\n\n\n

    What\u2019s Changing for Individuals<\/h2>\n\n\n\n

    Here\u2019s what the new default tax regime means for your pocket:<\/p>\n\n\n\n

    New Income Tax Slabs (FY 2025-26, AY 2026-27)<\/strong><\/h3>\n\n\n\n
    Annual Income (\u20b9)<\/th>Tax Rate<\/th><\/tr><\/thead>
    0 \u2013 4,00,000<\/td>Nil<\/td><\/tr>
    4,00,001 \u2013 8,00,000<\/td>5%<\/td><\/tr>
    8,00,001 \u2013 12,00,000<\/td>10%<\/td><\/tr>
    12,00,001 \u2013 16,00,000<\/td>15%<\/td><\/tr>
    16,00,001 \u2013 20,00,000<\/td>20%<\/td><\/tr>
    20,00,001 \u2013 24,00,000<\/td>25%<\/td><\/tr>
    Above 24,00,000<\/td>30%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    Key perks:<\/strong><\/p>\n\n\n\n

      \n
    • Higher basic exemption<\/strong>: \u20b94 lakh (up from \u20b93 lakh)<\/li>\n\n\n\n
    • Bigger rebate<\/strong>: Up to \u20b960,000, making income up to \u20b912 lakh effectively tax-free (\u20b912.75 lakh for salaried taxpayers with standard deduction)<\/li>\n\n\n\n
    • Fairer pension taxation<\/strong> for non-employees<\/li>\n\n\n\n
    • No need for complex deduction planning<\/strong> \u2014 focus shifts to higher take-home pay<\/li>\n<\/ul>\n\n\n\n

      \ud83d\udca1 Impact:<\/em> More disposable income for the middle class could boost spending, savings, and investments.<\/p>\n\n\n\n

      Key Changes for Businesses and Investors<\/h2>\n\n\n\n

      The Bill isn\u2019t just about personal taxes. It also reshapes corporate taxation and investment rules:<\/p>\n\n\n\n

        \n
      • TDS\/TCS Simplification<\/strong>\n
          \n
        • TCS on sale of goods removed from April 1, 2025<\/li>\n\n\n\n
        • Lower TDS on securitization trust income (10% from 25\u201330%)<\/li>\n\n\n\n
        • Easier \u201cNil\u201d TDS certificates for those with no liability<\/li>\n<\/ul>\n<\/li>\n\n\n\n
        • Extended Tax Holidays & Incentives<\/strong>\n
            \n
          • Startup tax holiday extended to April 1, 2030<\/li>\n\n\n\n
          • Sovereign Wealth Fund & Pension Fund investment window extended to March 31, 2030<\/li>\n\n\n\n
          • IFSC benefits extended, including for offshore funds and leasing businesses<\/li>\n<\/ul>\n<\/li>\n\n\n\n
          • FDI Boost in Insurance<\/strong>\n
              \n
            • Limit raised from 74% to 100%, if all premiums are invested in India<\/li>\n<\/ul>\n<\/li>\n\n\n\n
            • Uniform Capital Gains for FPIs<\/strong>\n
                \n
              • 12.5% rate on all securities for Foreign Portfolio Investors<\/li>\n<\/ul>\n<\/li>\n\n\n\n
              • Support for MSMEs<\/strong>\n
                  \n
                • Higher presumptive taxation thresholds (\u20b92 crore for businesses, \u20b975 lakh for professionals)<\/li>\n\n\n\n
                • Bigger credit guarantee limits and harmonized definitions<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

                  Why This Reform Matters for India\u2019s Economy<\/h2>\n\n\n\n

                  The government sees the Income-Tax Bill, 2025, as a pillar of its Viksit Bharat (Developed India) 2047<\/strong> vision. Lower and simpler taxes should:<\/p>\n\n\n\n

                    \n
                  • Increase household spending power<\/li>\n\n\n\n
                  • Attract more domestic and foreign investment<\/li>\n\n\n\n
                  • Make compliance easier and reduce disputes<\/li>\n\n\n\n
                  • Create a more predictable business environment<\/li>\n<\/ul>\n\n\n\n

                    An Investment Friendliness Index<\/strong> for states, along with digital KYC reforms and easier merger approvals, will further improve India\u2019s ease of doing business.<\/p>\n\n\n\n

                    Expert Take<\/h2>\n\n\n\n

                    Tax professionals call this \u201cIndia\u2019s biggest simplification in decades.\u201d The reduction in legal text alone (from 823 to 622 pages) makes it easier for the average person to understand. While some global tax issues like OECD\u2019s minimum tax still need clarity, the overall direction is positive.<\/p>\n\n\n\n

                    Key Takeaways<\/h2>\n\n\n\n
                      \n
                    • August 11, 2025<\/strong>: Lok Sabha passes the Income-Tax Bill, 2025<\/li>\n\n\n\n
                    • April 1, 2026<\/strong>: New law takes effect<\/li>\n\n\n\n
                    • Middle-class taxpayers will see major relief<\/li>\n\n\n\n
                    • Businesses get simplified compliance and longer investment windows<\/li>\n\n\n\n
                    • India aims to be more investment-friendly globally<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                      On August 11, 2025, the Lok Sabha passed the Income-Tax Bill, 2025, which will replace the old 1961 Act from April 1, 2026. The goal? Simpler rules, lower taxes for many, and a more digital, transparent system. Whether you\u2019re a salaried professional, a business owner, or an investor, this bill will change how you plan […]<\/p>\n","protected":false},"author":9,"featured_media":5394,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_ayudawp_aiss_exclude":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8212","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/8212","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/comments?post=8212"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/8212\/revisions"}],"predecessor-version":[{"id":8214,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/8212\/revisions\/8214"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media\/5394"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=8212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/categories?post=8212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/tags?post=8212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}