Before the new Income Tax Bill is scheduled to be introduced in Parliament on February 13, 2025, the government has made it available to the public. The six-decade-old Income Tax Act of 1961 will be replaced by the new, more than 622-page law. To make tax terminology simpler, the bill has 536 clauses, 16 schedules, and 23 chapters.
Simple terminology like “tax year” are proposed in the measure, along with the establishment of a taxpayer’s charter and a thorough part that suggests international corporations be considered residents. It presents a new tax system that aims to make tax compliance easier and provide both individuals and companies with an alternate tax structure.
A new tax system for individuals, Hindu Undivided Families (HUFs), and others is proposed in the law. A taxpayer’s decision to adopt the new regime cannot be revoked in subsequent years unless certain requirements are met. In order to receive a reduced tax rate under this scheme, taxpayers will have to give up some exemptions and deductions.
Before opting in, salaried individuals must consider the loss of deductions, even though the new system may result in less compliance costs. Companies that meet the eligibility requirements can take advantage of reduced corporate tax rates.
Investors and traders in cryptocurrencies will have to abide by more stringent tax and reporting regulations. A flat 30% tax on revenue from virtual digital assets, such as cryptocurrency, NFTs, etc., is reinstated under the bill. With the exception of the acquisition cost, no exemptions or deductions will be permitted. Additionally, it suggested a 1% TDS on cryptocurrency transactions, which is still relevant for tracking online transactions.
