If you are a salaried class and you pay tax then there is good news for you. Let us tell you that recently the Parliament has passed the Income Tax (No. 2) Bill, 2025, which will come into force from April 1, 2026 and will replace the old Income Tax Act of 1961. In the new system, tax slabs have been simplified, rebates have been increased and the rules have been made cleaner than before. Under the rule, there is no tax on the first ₹ 4 lakh income and there will be a big rebate on income up to ₹ 12 lakh. The government says that this will reduce the hassle of tax filing and more money will be saved in the pockets of the people. Let’s know in detail…

What is the provision

The major provisions of the New Income Tax Bill 2025 provide great relief to the salaried class and middle class taxpayers. In the new tax system, there will be no tax on income up to ₹ 4 lakh. At the same time, 5% tax rate will be applicable on ₹ 4–8 lakh, 10% on ₹ 8–12 lakh and 15% on ₹ 12–16 lakh. Also, under Section 87A, those earning up to ₹ 12 lakh will get full tax rebate of up to ₹ 60,000, due to which no tax will have to be paid on salary income up to ₹ 12.75 lakh by adding the standard deduction of ₹ 75,000. Simplifying the complex provisions of the old law, the number of sections has been reduced from 819 to 536 and the new concept of ‘tax year’ has been implemented. Apart from this, provision has also been made for faceless digital assessment, action with advance notice, and early payment of TDS refund. This new law will come into effect from April 1, 2026 and will be applicable from the financial year 2025–26.

Tax exemption

In the new tax regime, under section 87A, those earning up to ₹ 12 lakh will now get a full tax rebate of up to ₹ 60,000. This means that by adding the standard deduction of ₹ 75,000, no tax will have to be paid on salary income up to ₹ 12.75 lakh. Earlier in the new tax regime, this rebate was available only on income up to ₹ 7 lakh, which has now been increased significantly. At the same time, in the old tax system, the current limit of section 87A will continue to be ₹ 5 lakh and the rebate will be ₹ 12,500 as before. Please note that this rebate will not be applicable on special income like short term capital gain (STCG).

Simplification of tax slabs

Under the new tax regime, the proposed tax slabs will be 5% on income from ₹4,00,001 to ₹8 lakh, 10% on income from ₹8,00,001 to ₹12 lakh and 15% on income from ₹12,00,001 to ₹16 lakh. Income from ₹16,00,001 to ₹20 lakh will be taxed at 20%, while income up to ₹24 lakh will be taxed at 25%. Income above ₹24 lakh will be taxed at up to 30%. The aim of these slabs is to simplify tax calculations and reduce the impact of higher marginal rates.

Property Tax

Section 20 clarifies the taxation of property tax, where income from owned buildings or land is taxable under the head ‘Income from house property’. The annual value will now be the higher of the estimated or actual rent received. However, properties used for business purposes are taxed under the head business income. This amendment seeks to provide clarity and fairness in property taxation.

UPS Alignment

The bill also aligns the Integrated Pension Scheme (UPS) with the National Pension System (NPS) for taxation. Up to 60% of the pension amount on retirement is tax-free. In addition, employee and employer contributions will continue to be eligible for tax deductions under sections 80CCD(1) and 80CCD(2). The aim is to remove the disparities in tax treatment between UPS and NPS and encourage more retirement planning.

The post New Income Tax Bill Passed: Major Relief for Taxpayers with Fresh Exemptions and Benefits first appeared on Rightsofemployees.com.

The new Income Tax Bill has been passed in the Lok Sabha. It was earlier withdrawn to incorporate certain recommendations of the Lok Sabha’s select panel. Another bill, the Taxation Laws (Amendment) Bill, was also passed in the Lok Sabha. The bill aims to provide tax exemption to subscribers of the Unified Pension Scheme. Both the bills were passed without any debate as the opposition continued to protest demanding discussion on various issues including SIR. The government has incorporated almost all the recommendations of the select committee in the new revised Income Tax Bill .

New income tax bill passed without discussion

Union Finance Minister Nirmala Sitharaman on Monday introduced the revised version of the new Income Tax Bill, 2025 in the Lok Sabha amid opposition uproar. It includes most of the recommendations from the Parliamentary Select Committee headed by BJP leader Baijayant Panda. This new bill is going to replace the old laws, Income Tax Act 1961. This bill has been approved by the Lok Sabha without discussion.

Nirmala Sitharaman told what is in the bill

While introducing the bill in the Lok Sabha, Finance Minister Sitharaman said that many suggestions were received, which were required to be incorporated to provide the correct legislative meaning. She said that improvements have been made in the nature of drafting, alignment of phrases, resulting changes and cross referencing. The earlier bill was withdrawn to avoid confusion. Now the new Income Tax Bill 2025 has been passed in the Lok Sabha.

The opposition raised questions on passing the bill without discussion

The opposition has raised questions on the passing of the new Income Tax Bill. Samajwadi Party chief and MP Akhilesh Yadav reacted to the new Income Tax Bill 2025. He said that such a big decision was taken without discussion in the House. Some new changes are going to be made in the Income Tax Bill. Everyone has seen the situation of demonetization, GST. Now America is also increasing tariffs. Business is dependent on China, we are seeing all this. Akhilesh Yadav further said that where are we taking the country? How will a developed India be created in Amrit Kaal, these are big questions.

285 suggestions included in the updated income tax bill

Earlier, while introducing the new Income Tax Bill in the Lok Sabha, Nirmala Sitharaman said that the revised bill will improve fairness and clarity. It will bring the law in line with the existing provisions. The new draft aims to provide MPs with a single, updated version, which reflects all the suggested changes. The updated Income Tax Bill 2025 incorporates 285 suggestions from the Parliamentary Select Committee.

Why was the new income tax bill introduced?

The new law aims to simplify tax processes and remove past loopholes, potentially transforming the income tax landscape in the country. Last week, the government formally withdrew the Income Tax Bill, 2025, which was introduced in the Lok Sabha on February 13 to replace the existing Income Tax Act, 1961.

These are the big changes in the Revised Income Tax Bill

According to the government, the revised bill has made extensive changes in slabs and rates to benefit all taxpayers. The new structure will reduce taxes for the middle class and leave more money in their hands, which will boost domestic consumption, savings and investment.

The post New Income Tax Bill 2025 Passed: Key Highlights Announced by Finance Minister first appeared on Rightsofemployees.com.