Explaining The Tax Year In The New Income Tax Bill 2025
Updated: 13-02-2025 at 12:31 PM
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One of the most awaited announcements that the people of India are waiting for is expected to be announced today. i.e. the New Income Tax Bill of 2025. The New Bill will be introduced as a replacement and updated version of the old Income Tax Act of 1961.
The New Income Tax Bill 2025 comprises several provisions and terms and one of those newly added terms is the ‘Tax Year’. It has been added to replace old terms like ‘previous year’ or ‘assessment year’.
The Old Income Tax Act of 1961 has been in use for decades and has been modified time and again which made it complex instead of easy. It was getting difficult for the taxpayers to understand it and find their way to it which led to the birth of the New Income Tax Bill 2025.
Read the news article to know what the expected added term i.e. ‘Tax Year’ means and why is it expected to be added to the New Income Tax Bill 2025.
What Is Tax Year?
The New Income Tax Bill of 2025 is expected to be announced today in the parliament of India and experts are expecting it to have a new term. i.e. ‘Tax Year’. Tax Year would be defined as a ‘Financial year beginning on the 1st day of April and ending on the 31st day of March of the following year’.
The newly added term would replace old terms like ‘previous year’ or ‘assessment year’ which were mentioned in the old Income Tax Act of 1961. The meaning of both the terms are mentioned below for one’s better understanding:
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Previous Year: Year in which an income has been earned (April 1st to March 31st).
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Assessment Year: The year following the previous year when tax is calculated. This has been removed altogether from the New Bill as the Tax Year would cover both, earning (previous) and assessment years.
Benefits Of Tax Year
There are many benefits associated with the term ‘Tax Year’ if it is added to the New Bill 2025. Some of the expected benefits are mentioned below:
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No more confusion between the previous and assessment years.
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Tax Year is used by many developed countries and has proven to be very effective and efficient.
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Easier advanced tax computation by referring to the Tax Year.
How Will It Work?
As per the old Income Tax Act of 1961, when an individual earns in the year of April 1st of 2024 – March 31st of 2025, the period was known as the Previous Year and when the income was assessed, it was known as the Assessment year.
To remove this unnecessary redundancy of words, the New Bill is expected to have a Tax Year. When an individual earns in the year April 1st of 2024 – March 31st of 2025, it would simply be known as the Tax Year 2025-26.
Conclusion
The New Income Tax Bill of 2025 will consist of a newly added term referred to as the Tax year. The newly added term would replace old terms like Previous and Assessment Year from the old Income Tax Act of 1961.
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