The Indian government has introduced the New Income Tax Bill, 2025, aiming to modernize and simplify the country’s tax framework. While the bill retains the existing structure of capital gains taxation, it brings significant changes in language, organization, and clarity. One of the most notable updates is the formal inclusion of cryptocurrencies as taxable capital assets.
Himanshu Sinha and Aditi Goyal, Partners at Trilegal, noted that the bill maintains the overall structure of the law while addressing contemporary needs. They emphasized that this balanced approach ensures continuity while simplifying compliance.
Key Highlights of the New Income Tax Bill
1. Simplified Language and Structure
The new bill reduces the complexity of the 65-year-old Income Tax Act of 1961. With 2.56 lakh words, it is almost 50% shorter than the previous Act, which had half a million words. Despite the reduction, the essence of the law remains intact, ensuring continuity for taxpayers and professionals.2. Cryptocurrencies as Taxable Assets
The bill formally classifies virtual digital assets (VDAs), including cryptocurrencies, as taxable capital assets. This move eliminates ambiguity and provides clarity on how such assets will be taxed.3. Retention of Capital Gains Structure
The structure of capital gains taxation remains unchanged, but the language has been simplified for better understanding. Key clauses related to capital gains include:- Clause 196: Taxation of short-term capital gains (STCG) on equity shares, units of equity-oriented funds, or business trusts.
- Clause 197: Taxation of long-term capital gains (LTCG) on assets other than equity shares or units of equity-oriented funds.
- Clause 198: Taxation of LTCG on equity shares, units of equity-oriented funds, or business trusts.
4. Streamlined Provisions for Charitable Trusts
The bill introduces a dedicated chapter (Chapter XVII-B) for non-profit organizations, consolidating all provisions related to registration, computation, and taxation. This simplifies compliance for charitable trusts.5. Digital Compliance and Reduced Litigation
The bill emphasizes digital compliance, making tax filing, dispute resolution, and assessment procedures more efficient. This is expected to reduce litigation risks and improve taxpayer experience.What Stays the Same?
Taxation of Equity Mutual Funds and Shares
The tax treatment of equity mutual funds and shares remains largely unchanged.- Short-term capital gains (STCG): Taxed at 20% if sold within 12 months of purchase.
- Long-term capital gains (LTCG): Taxed at 12.5% if held for more than 12 months, with an exemption limit increased to Rs 1.25 lakh.
Continuity of Key Provisions
The new bill retains the core principles of the Income Tax Act, 1961, ensuring familiarity for stakeholders while adapting to modern economic realities.Expert Opinions
Taxation experts have welcomed the bill, calling it a significant reform. According to Akhil Chandna, Partner at Grant Thornton Bharat, the bill removes redundant provisions, simplifies language, and enhances accessibility. Naveen Wadhwa, Vice President at Taxmann, highlighted the consolidation of provisions for charitable trusts as a major improvement.Himanshu Sinha and Aditi Goyal, Partners at Trilegal, noted that the bill maintains the overall structure of the law while addressing contemporary needs. They emphasized that this balanced approach ensures continuity while simplifying compliance.
Conclusion
The New Income Tax Bill, 2025, is a step towards a more modern and user-friendly tax system in India. By simplifying language, retaining key provisions, and incorporating digital assets like cryptocurrencies, the bill aims to reduce complexity and improve compliance. While the capital gains tax structure remains unchanged, the clarity and organization of the new bill are expected to benefit taxpayers and professionals alike.Disclaimer: The information in this blog is for general guidance only and not professional tax or legal advice. Tax laws may change, and readers should consult a qualified expert for personalized advice. The author is not responsible for any errors or actions taken based on this content. Always verify details from official sources.