After nearly a decade of deferred drafts, the Income Tax Bill 2025 was introduced in Parliament in February 2025, with an effective date of April 1, 2026. The stated objective — simplicity, clarity, and reduced litigation — is genuine. The execution is the bureaucratic equivalent of translating an ancient text: the meaning is preserved almost entirely, but the sentence structure, section numbering, and chapter organisation are dramatically altered. For taxpayers and practitioners, this is simultaneously a simplification win and a transition-year nightmare.
Income Tax Bill 2025 — Structural Overview
536 clauses (vs. 298 sections in the 1961 Act). 23 chapters reorganised thematically (vs. the chronological and ad-hoc structure of the 1961 Act). Reduction from 800+ provisions to approximately 350 operative clauses, with the remainder reorganised as Schedules. Target effective date: Assessment Year 2027-28 (i.e., income earned from April 1, 2026 onward).
Statutory Reference
Key Structural Changes: 1961 Act vs. New Code 2025
Definitions
1961 Act: Scattered across sections, chapters, and circulars. New Code: Consolidated in Chapter 2 — all key definitions in one place. Practically significant for dispute resolution.
Tax Rates
No new rates introduced in the Code itself. Both old and new tax regimes (Sections 115BAC etc.) are restructured as Schedule-based rate tables — easier to read, not easier to compute.
TDS Provisions
1961 Act: 37 separate TDS sections with different thresholds, rates, and payment rules. New Code: Unified TDS chapter with a single consolidated table — one of the genuine simplification wins.
Assessment Procedures
1961 Act: Faceless assessment, DRP, ITAT, HC, SC — spread across Sections 143–265. New Code: Reorganised under a single "Dispute Resolution" chapter. Timeline rules are unchanged.
The new Code does not change the tax burden on any assessee by one rupee. What it changes is the reference architecture for every return, audit, and litigation that happens from FY 2026-27. The transition cost is real.
— Sami Tax Direct Tax Desk, February 2025
For corporate taxpayers, the most consequential change is the renumbering of every section they have ever cited in a tax audit, transfer pricing report, litigation filing, or board resolution. Every compliance system — SAP tax modules, ERP configurations, DSC-linked return packages — will need section reference updates. The CBDT has indicated that a cross-reference table will be published, but the operational migration burden falls entirely on the taxpayer. Companies that rely heavily on automated compliance workflows should begin their mapping exercise now, not in March 2026.
New Income Tax Code: Preparation Timeline
Bill introduced in Parliament. Read the Statement of Objects and the comparative table published by CBDT. Do not panic — substance is unchanged.
Bill likely passed. Begin section cross-reference mapping for your top 20 most-cited provisions in your tax filings.
Update ERP/tax automation tools to carry dual-citation capability (old and new sections) as a transition measure.
CBDT expected to publish final Rules under new Code. Update all standard templates (audit reports, notices, appeals) to new format.
New Code effective. All returns for AY 2027-28 will be filed under new section references. Compliance systems must be fully transitioned.
What Sami Tax Is Doing for Clients
- We have already begun building a Sami Tax IT Code 2025 Transition Workbook — a clause-by-clause cross-reference mapping of every provision that affects our clients' filings, matched against the new Code numbering.
- We are also reviewing all our standing opinions, Board resolutions, and litigation filings for clients to identify which will need section reference updates before they lose their legal standing.
- If you are a corporate taxpayer with complex deduction structures, transfer pricing arrangements, or pending litigation under the 1961 Act, talk to us now — we will map your exposure and produce an updated compliance calendar before the new Code lands.