The Institute of Chartered Accountants of India (ICAI) requested the Finance Ministry (FinMin) to review the new Income Tax Bill 2025. They suggested some improvements that led to the formation of a five-member group by the ICAI which carefully studied the bill and made some recommendations.
Charanjot Singh Nanda, the newly elected President of ICAI, approved the bill as a significant measure for strengthening employment generation and encouraging the growth of Micro, Small, and Medium Enterprises (MSMEs). He highlighted that the bill’s streamlined policies are set to improve the Indian economy.
The Central Board of Direct Taxes (CBDT) has asked for detailed feedback on the bill. The ICAI will consider the needs of individual taxpayers & businesses and go through each section of the bill. They aim to make the process easier for everyone by balancing living for taxpayers and smooth business operations.
On Thursday, Finance Minister Nirmala Sitharaman introduced the bill in Parliament aiming to create a much simpler and more investor-friendly income tax system. The bill was also sent to a parliamentary committee for a thorough review.
In December 2024, a special tax regime was suggested by the ICAI for different partnership firms currently taxed at 30 percent. They proposed an additional 12 percent charge on incomes exceeding Rs. 1 crore. The ICAI also made some other recommendations, like simplifying tax registrations for charitable trusts, setting time limits, and improving the Grievance Redressal System.
The structure of the Income Tax Bill 2025 attempted to simplify the six-decade-old tax framework. Key changes such as replacing the traditional concepts of “previous year” and “assessment year” with “tax year” and “financial year succeeding the tax year.”
ICAI’s prior suggestions included the removal of outdated sections after a comprehensive review of the Income Tax Act, of 1961. They provided a detailed list of sections and schedules that need to be removed. The Income Tax Bill also proposes changes in definitions that refer to interpretations of terms like capital asset, relative, property, maximum marginal rate, and advance ruling, as per ICAI’s suggestions.
The removal of sections resulted in a much shorter bill, with the word count reduced by almost 50 percent as compared to the previous one. These efforts represented a genuine effort to simplify the reading and understanding of the income tax law.
Furthermore, various suggestions were related to an increase in the salary threshold of ‘specified employees’ for prerequisite valuation and implementing a simplified regime for smaller trusts and institutions. Long-term capital gains of a business trust are to be taxed at 12.5 percent rather than the maximum marginal rate, proposed by ICAI in the Finance Bill, 2025 as well as in the new bill.
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