Explore the latest updates on the Income-Tax Bill, 2025, introduced in Lok Sabha to replace the Income-Tax Act, 1961. Learn about its key changes, including tax schemes, undisclosed income, virtual digital assets, and dispute resolution mechanisms.
Introduction
The Income-Tax Bill, 2025 was introduced in Lok Sabha on February 13, 2025, aiming to modernize and streamline India's taxation system. This bill seeks to replace the Income-Tax Act, 1961, while retaining most of its provisions, tax rates, and compliance structures.
Key updates include faceless tax assessment, the inclusion of virtual digital assets under undisclosed income, and provisions for accessing virtual digital space during tax investigations. The bill is set to be implemented from April 1, 2026.
Key Features of the Income-Tax Bill, 2025
1. Power to Frame New Tax Schemes
The bill retains the provision for faceless tax assessment and allows the central government to introduce new tax schemes to enhance efficiency, transparency, and accountability. These schemes will:
Reduce direct interaction between taxpayers and tax officials using technology-driven solutions.
Improve resource utilization by leveraging economies of scale and functional specialization.
Be laid before Parliament for review before implementation.
2. Undisclosed Income Now Includes Virtual Digital Assets
One of the major changes is the expansion of undisclosed income definitions to include virtual digital assets (VDAs).
Virtual digital assets include cryptocurrencies, tokens, and cryptographically generated assets that hold value in digital form.
This amendment aligns with the Finance Bill, 2025, ensuring better regulation and taxation of digital assets.
3. Access to Virtual Digital Space in Tax Investigations
The bill grants tax authorities the power to access virtual digital spaces during search and seizure operations. This includes:
Email servers, social media accounts, online investment and trading accounts.
Websites used for storing ownership details of assets.
The ability to override access codes to gain entry into digital spaces.
This move aims to curb tax evasion through digital transactions and enhance data-driven investigations.
4. Strengthening the Dispute Resolution Panel
The bill retains the provision allowing certain taxpayers (such as foreign companies and non-residents) to refer disputes to a Dispute Resolution Panel (DRP). The new provisions require:
The panel to issue detailed directions along with points of determination.
Proper justifications for decisions, improving transparency and accountability in tax dispute settlements.
5. Clear Interpretation of Tax Treaties
The bill clarifies the interpretation of tax treaties signed between India and other nations.
If a term is not defined in a treaty or the Income-Tax Act, its meaning will be assigned as per any other central law.
This ensures uniform interpretation and prevents ambiguity in double taxation avoidance agreements (DTAAs).
Impact of the Income-Tax Bill, 2025 on Taxpayers
No changes in tax rates: Individual and corporate tax rates remain unchanged.
Greater transparency: Faceless tax assessment and strict digital asset regulations reduce loopholes.
Stronger tax enforcement: Inclusion of virtual digital assets and digital investigations aims to curb tax evasion.
Simplified language & fewer redundant provisions make tax laws easier to understand.
Conclusion
The Income-Tax Bill, 2025 modernizes India’s taxation framework by introducing faceless assessment, digital space access for tax authorities, and stricter rules for virtual digital assets. While tax rates remain the same, the bill improves compliance, enforcement, and transparency. As India moves toward a digitally advanced taxation system, these changes will ensure a more efficient and accountable tax structure.
For more updates on tax reforms, budget policies, and financial regulations, visit Atharva Examwise.
By Team Atharva Examwise #atharvaexamwise
