Finance Minister Nirmala Sitharaman announced that the new Income-tax Act, 2025 aims to simplify rules, reduce compliance burden, and minimize tax-related disputes for small business owners and professionals. Small businesses with turnovers up to Rs 10 crore, under specific conditions, will no longer need to maintain detailed accounts or undergo audits, easing their compliance responsibilities. This move is expected to offer significant relief to smaller enterprises.
FM Sitharaman emphasized that the new law addresses various contentious issues, such as pre-construction interest on housing loans, to reduce ambiguity and potential disputes. She highlighted the importance of reducing litigation, stating that each case reaching a tribunal signifies a gap in the system. The new Act focuses on minimizing errors, disputes, and compliance costs, promoting smoother and transparent tax compliance practices.
The government introduced the Income Tax Website 2.0 alongside the new law, providing taxpayers with a digital platform to interact with authorities, ask questions, and file returns conveniently. Officials have been instructed to enhance outreach efforts beyond major cities, engaging with diverse groups, including students. The new Income-tax Act replaces the complex Income-tax Act, 1961, streamlining the structure significantly by reducing sections from 819 to 536 and chapters from 47 to 23.
FM Sitharaman highlighted that the new law simplifies the tax year system by eliminating the distinction between “previous year” and “assessment year,” making it more straightforward for taxpayers to comprehend and adhere to the regulations.
