Finance Ministry Seeks ICAI’s Review on Income Tax Bill 2025

The Finance Ministry has asked the Institute of Chartered Accountants of India (ICAI) to thoroughly review the new Income Tax Bill 2025 and provide suggestions for improvement. In response, ICAI has set up a five-member expert group to examine the bill and recommend necessary changes, according to a report by The Economic Times.

ICAI to Provide Detailed Feedback

The Central Board of Direct Taxes (CBDT) has formally requested detailed feedback from ICAI. The institute will conduct a section-by-section analysis of the bill, keeping in mind the requirements of businesses and individual taxpayers. The objective is to create a tax system that is both business-friendly and easier for taxpayers to navigate.

Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in Parliament on Thursday. The bill aims to simplify the tax structure and encourage investment. Additionally, the bill has been referred to a parliamentary committee for further review.

ICAI’s Previous Tax Recommendations

In December 2024, ICAI suggested a special tax regime for partnership firms, which currently face a 30% tax rate. They also proposed a 12% surcharge on incomes exceeding ₹1 crore. Other recommendations included:

• Simplifying tax registration for charitable trusts
• Setting deadlines for appeals
• Improving the grievance redressal system

Key Changes in the New Income Tax Bill

The new Income Tax Bill 2025 is designed to streamline tax laws by removing unnecessary provisions. Key highlights include:

• Reduction in length: The new bill is 201 pages shorter than the Income Tax Act of 1961, cutting down from 823 pages to 622 pages.
• New terminology: The term “assessment year” will now be replaced with “tax year” to reduce confusion.
• Changes for new businesses: The tax year for newly established businesses will start from their date of incorporation.
• Clarifications in key sections: The bill provides clarity on Sections 44AD, 44AE, and 44ADA, which impact professionals and businesses.
• Refining profit computation: A new concept, “profit claimed to have been actually earned,” has been introduced for better tax assessment.

The Finance Ministry hopes that ICAI’s review will help create a more efficient and transparent tax system. The parliamentary committee’s report will further shape the final version of the Income Tax Bill 2025 before its implementation.