No Change in Capital Gains Tax Under New Income Tax Bill

By: Admin
February 12, 2025
Categories: New Income Tax Act
4 Min Read

The new Income Tax Bill 2025, set for introduction in the Lok Sabha on Thursday, retains the existing capital gains tax structure and income tax rate slabs. Spanning 23 chapters, 536 clauses, and 16 schedules, the bill significantly overhauls the Income Tax Act, 1961, which currently has 298 sections and 14 schedules.

Key Highlights of the Income Tax Bill 2025

1. Introduction of “Tax Year”

  • The bill replaces the assessment year with a “tax year” to simplify tax compliance.
  • The term “previous year” now replaces “financial year” for better clarity.

2. Structural Changes for Simplification

  • Income exemptions are now listed in schedules instead of separate sections.
  • Salary deductions (such as standard deduction, gratuity, and leave encashment) are consolidated under a single chapter (Chapter VIII, Clauses 123-154) rather than scattered across multiple sections.
  • Deductions for EV purchases, donations, medical expenses, and education-related expenses have been updated.

3. Greater Powers to CBDT & Tax Authorities

  • The bill grants the Central Board of Direct Taxes (CBDT) more authority to frame rules and schemes, aligning tax governance with GST regulations.
  • Civil courts can no longer interfere in tax matters, giving direct tax authorities exclusive jurisdiction.

4. Taxation of Digital Earnings & Gambling Income

  • Clause 194 outlines specific tax rules for:
    • Lotteries, crossword puzzles, horse races, and card games
    • Online gaming income
    • Transfers of virtual digital assets (cryptocurrencies, NFTs, etc.)

5. Enhanced Compliance & Reporting

  • Crypto transactions now require detailed reporting under Clause 509.
  • Annual Information Statements (AIS) under Clause 510 improve taxpayer transparency.
  • Clause 511 mandates international tax reporting for cross-border transactions.

Expert Opinions on the New Bill

Tax experts emphasize that the new bill streamlines tax administration by eliminating unnecessary complexity. Unlike the previous law, it removes lengthy explanations and provisos, making it more concise and structured.

Additionally, the bill now directly incorporates provisions related to:

  • Revenue recognition for service contracts
  • Allowability of Mark-to-Market (MTM) losses
  • Inventory valuation at cost or net realizable value

These provisions were previously covered under Income Computation and Disclosure Standards (ICDS).

Final Thoughts

The Income Tax Bill 2025 marks a significant step in simplifying tax laws, reducing confusion, and improving compliance mechanisms. While capital gains tax remains unchanged, the bill modernizes India’s direct tax system with several procedural updates.

Stay tuned for more updates as the bill is tabled in Parliament!

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