ProIndiaClub

In new Income Tax Act, Under Section 4 of the Income Tax Act, 1961, income tax was levied for a financial year based on the rates set in the Finance Act for the corresponding assessment year. However, Clause 4 of the Income Tax Bill, 2025, proposes replacing this structure with a unified “tax year,” merging the financial year and assessment year into a single period. This reform is intended to streamline tax compliance, eliminate ambiguities in return filing, and bring India’s tax system in line with global best practices.

The traditional five categories of income—Salaries, House Property, Business/Profession, Capital Gains, and Other Sources—remain unchanged in the new bill. However, Clauses 13 to 59 broaden these classifications by specifically incorporating earnings from virtual assets, digital businesses, and online income. These updates aim to modernize the tax framework, ensuring that emerging revenue streams are appropriately recognized and regulated under tax laws.