Navigating the Income Tax Act 2025 for Charitable Institutions

Present provisions in ITA 1961

• Chapter III: Incomes which do not form part of total income
  • Sections 11-13 (section 10(23C approval entities merged)
    • Section 11-Income from property held for charitable or religious purpose
    • Section 12-Income of trusts from contributions-conditions 12A and registration 12AB
    • Section 13-Section 11 not to apply in certain cases
• Chapter VI-A-80G-Deduction in respect of donations to certain funds, charitable institutions, etc
• Chapter XII-Section 105BBC Taxation of Anonymous donations 115BBI Specified income of certain institutions
• Chapter XIIB-Section 115TD Exit tax on accreted income of charitable institutions

Income Tax Act 2025 (effective 1.4.26)

Consolidation of Provisions for NPOs into a Single Chapter: Chapter VIIB-Special Provisions for Registered NPOs-(Sections 332-355). This chapter is divided into seven structured subparts:

1. Registration of NPO Section 332-333:

   • “Registered Nonprofit Organization” (Registered NPO) as a unified definition for all charitable entities i.e. society, Trust, S8, Univ etc. Definition of charitable object in section 2(23) is same except 2 provisos to seventh limb (GPU) removed from definition and taken to a separate Section 346.

   • Properties should be held under irrevocable trust for general public.

   • Seven types of registrations-activities not commenced, activities commenced but not claimed exemption benefit, provisional registration and activity commenced, provisional registration but activity not commenced till validity period, renewal for expiry of existing registration, inoperative clauses and modification of object. Table specifies timelines for making application, approval timeline by Department and validity of registration (3/5/10 years).
     
     

2. Income of registered NPO-Section 334-343:

   • Regular income has been defined in 4 parts Section 335-receipts from charitable/religious activity, receipt from property/investment, voluntary contribution (donation), incidental business income.

   • Taxable regular income Section 336-85% utilisation or accumulated under Section 342.

   • Specified income will be taxable @30%-section 337-anonymous donation beyond allowable limits, benefit to related person, income applied outside India, investment contravening clause 350, inter charity donation of accumulated income, accumulated income not applied within timelines, not applied for charitable or religious purpose etc. Table provided. 

   • Corpus as defined in Section 339 (direction from donor that it be towards corpus) is not income Section 338. 

   • Application of income section 341-normal provisions, 85% for inter charity, replenishment of corpus, return of loans when replenished or returned, nil for corpus donation etc. 

   • Accumulated income section 342-5 years, invested in modes under clause 350, repurpose allowed, no inter charity donation, in case of dissolution income transferred to similar object organisation.

   • Deemed accumulated income section 343-15% income set apart from income, invested in modes specified in section 350.
     
     

3. Commercial Activities –section 344 for business undertaking same as section 11(4).

   • No registered NPO will take up commercial activity (except GPU) unless it is incidental and separate books maintained section 345.

   • Registered NPO carrying on GPU can do commercial activity as per the 2 provisos-it is to fulfil advancement of GPU, ceiling of 20% and separate books Section 346.
     
     

4. Compliance section 347-350: Books of accounts, Audit, ITR, Modes of investment.
   
   

5. Violations section 351-353: Specified violations, cancellation and accreted tax. Specified non compliance (non maintenance of books of accounts, non filing ITR, commercial receipts in excess of 20%) tax calculation as per Section 13(10) and (11) of ITA 1961.
   
   

6. Deductions for donations Section 133 (erstwhile 80G) – conditions, registrations.
   
   

7. Interpretation: Definitions and explanations of key terms used in the chapter include: anonymous donation (applicable only for religious institutions now), donation (VC), commercial activity, registered NPO, related (specified) person.

Section navigator between ITA 1961 and 2025 released by CBDT. 

 

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Answers to Frequently Asked Questions

(Source: Official FAQs released by CBDT)

 

Q1. When was the current Income-tax Act passed?

Ans: The current Income-tax Act was enacted in 1961 and came into existence with effect from 01.04.1962. It has been amended nearly 65 times with more than 4000 amendments, year on year through Finance Acts, based on the evolving requirements of modifications in taxation policy.

Q2. What concerns have been raised regarding the Income-tax Act 1961?

Ans: Tax administrators, practitioners and taxpayers have acknowledged the contribution of the Income-tax Act, 1961 in overall tax governance and economy. However, over the time concerns have also been expressed over the accumulation of amendments, the intricate language, detailed provisions, redundancies and the heavy structure of the Income-tax Act.

Q3. What are the reasons for regular amendments in the Income-taxIncome Tax Act as against other Acts?

Ans: The Income-tax Act is dynamic legislation requiring regular updating and amendments to reflect the nation’s changing economic, social, and political realities. Criminal and other civil laws do not undergo such frequent updating and amendments whereas the Income-tax Act is regularly updated (on annual basis) to reflect the economic changes, fiscal policies, and government priorities. ItIt, therefore, adapts to changes in the economy, business environments, inflation rates, income sources, and global financial trends. The government has introduced tax reforms to encourage specific sectors of the economy while balancing the same with requirements of revenue collection and widening/deepening of the tax base. Given its direct link to taxation and economic conditions, the Act needs to be more adaptable to reflect shifting economic policies, changing incomes, inflation, and emerging industries. The dynamic nature of the Income-tax Act provides it flexibility to accommodate new economic trends.

Examples:

i.

1. To promote exports, specific provisions such as 80HH, 80HHC were brought into the statute. ii.The same having served intended purpose have been since omitted or made inapplicable after sun set date.
2. To promote infrastructure development, section 80IA was introduced.brought iii.into Income-tax Act, 1961.
3. Sections 80HHE, 10A and 10AA were introduced for facilitating software exports.
iv.
4. Section 80IAC wasis introducedyet toanother encourageexample of encouraging the start-ups.
   
   

Q4. Why has the Income-tax Act 19611961, become bulky over time?

Ans: The income tax law has become increasingly bulky due to traditional drafting style, numerous amendments, explanations, provisos, clarifications issued over time, andwith retentionits traditional style of non-operationaldrafting and numerous amendments. The complexity of language in the present Act is a product of different factors. To keep pace with certain legal pronouncements, explanations and provisos were often inserted to clarify legislative intent. Changing taxation priorities also led to introduction of additional text to an otherwise simple provision. Further, certain provisions dueremained toin the statute, despite becoming non-operational, in view of pending claimsclaims/issues from earlier years.

Q5. What simplification efforts have been made in the past?

Ans: PastAttempts effortshave includebeen attemptsmade in the past, including those in 2009 and 2019.2019 Theirfor simplification of the Income tax Act. The recommendations from these efforts, as regards policy, have been partiallyconsidered implemented through policy changes made overin the years.amendments carried out from time to time.

Q6. Has the present simplification exercise considered international experience?experience of other countries who have undertaken similar exercise?

Ans: Yes.Simplification UKof andtax Australialaws undertookhas received attention globally. Countries have undertaken similar exercises betweento 1994–2010enhance clarity and 1994–1997compliance respectively.in Simplificationtheir oftentaxation ledlaws.

In the UK, the process was carried out during the period 1994 to longer2010 for simplifying the language. Before simplification, the UK Income and Corporation Tax Act, 1988 comprised 960 pages. However, after simplification, it was divided into five separate Acts, with their page counts increased, resulting in a more segmented but cleareroverall larger body of tax codes.law. 

Similarly, Australia underwent a similar process during 1994 to 1997, where simplification of language also resulted in a longer tax code.

These international experiences guidedemphasize structuralthe delicate balance between simplification and the need for clear, unambiguous legal language. Drawing from these lessons, effort has been made to focus not just on linguistic simplification inbut thealso newon Bill.structural rationalization.

Q7. What is the scope of the exercise undertaken for the new Income-tax Bill?

Ans: The goalHon’ble Finance Minister in the budget speech in July 2024 stated that the purpose of the comprehensive review of the Income-tax Act, 1961, is to make the Act “concise, lucid, and easy to read and understand, as announced in the 2024 Budget Speech.understand”.

Q8. What ground rules wereare set for simplifyingmaking provisions?the existing provisions concise, lucid, easy to read and understand?

Ans: i.Following Redundantground provisionsrules removed,have been considered for simplifying the existing provisions:

1. The Bill proposes to eliminate redundant provisions, reducing its length by nearly half.
ii. Clear
2. The drafting style withof overthe new Bill is straightforward and clear, making the provisions easier to understand by incorporating more than 57 tables.tables iii.compared Removalto 18 tables in the Income-tax Act, 1961. Sub-sections and clauses have been used, instead of aboutrelying 1200on provisos and 900explanations explanations.for iv.exceptions Simplifiedand carve-outs. This minimises cross-referencingreferences system.and v.conflict Removalby aggregating all applicable provisions related to a single scenario in one place.
3. All provisos (about 1200) and explanations (about 900) have been removed.
4. The 1961 Act contains numerous cross-references to sections, sub-sections, clauses, sub-clauses, items, and sub-items, making the provisions challenging to interpret. The new Bill adopts a simplified reference system, allowing provisions to be cited by simply mentioning the section. For instance, section 133 (1)(b)(ii) in the new bill would indicate sub-clause (ii) of clause (b) of sub-section (1) of section 133 in the existing Act. This change makes the Act's language easier to understand.
5. A significant aspect of the Bill is the elimination of the concepts of ‘previous year’ and ‘assessment year’. Prior to 1989, the concept of ‘previous year’ and ‘assessment year’ had been brought because the taxpayers could have different twelve-month previous years for each source of income. From 1st April 1989, previous year was aligned to a financial year in all cases. However, ‘assessment year’ continued to be used for various proceedings under the Act. Thus, a taxpayer was required to track two different periods,i.e., replaced withthe ‘taxprevious year’ as well as the ‘assessment year’. This presented difficulties in complying to the provisions of the Act especially for a new taxpayer who had to keep track of ‘previous year’, ‘assessment year’ as well as ‘financial year’.
   
   

Q9. WereWhether stakeholdersany consultedconsultations duringhave drafting?been done with stakeholders, while drafting new
bill?

Ans: Yes.A Overcomprehensive consultative process was undertaken for the simplification exercise. A total of 20,976 online suggestions for simplification and removal of redundancies were received.received, Consultationsanalysed and relevant suggestions were categorized into policy-related, language simplification, removal of redundant or obsolete provisions, etc. Meetings with industry and professional associations were held and field-level brainstorming sessions were held within the Income Tax Department, towards this exercise.

At the international level, consultations were held with industrysome bodies,of fieldthe officers,taxation UKauthorities that had undertaken similar exercise in the recent past, viz. the Australian Tax Office and Australian tax authorities,Treasury, and referencethe materialsUK’s fromOffice of Tax Simplification.

The documents prepared in 2009 and 20192019, were reviewed.also referred, while undertaking the exercise. International and national guidance material such as ‘Drafting Guide for Simplification of Laws’ issued by Legislative Department, Ministry of Law and Justice, was studied for simplification of legal language.

Q10. What processes were followed in conducting the simplification exercise?

Ans: InputsIn addition to the stakeholder exercise mentioned in Q I.9, suggestions were gatheredsought from taxpayers, industry,industry officers.and professional associations, and field level officers of the Department. A committee of ~around 150 officers of the Department was actively involved in the entire exercise. The Committee prepared draftsthe draft text of various chapters, which werewas meticulously vetted by the Legislative Department of Ministry of Law and Justice.Justice, Overand consolidated in the form of the final Bill, after necessary approvals.

More than 60,000 man-hours were spent.dedicated by the team for finalising the new Bill.

Q11. How has the readability improved?improved in the new Bill?

Ans: SimplerThe readability of tax law has been improved by using simpler language, enumeratedas sections,against traditional legal language. Where multiple situations are covered, the sections have been made enumerative. Wherever feasible, extensive tables, relocationuse of longtable formats has been made. TDS provisions have been presented in a tabular form. Certain provisions such as section 10, which contained about 150 clauses (likehas oldbeen sectionplaced 10)in to schedules,Schedules and reducedpresented in the form of tables.

As a result of the comprehensive exercise, the size of the Bill.new Bill has reduced by about half on one hand and one the other, the provisions have been consolidated and presented in a user-friendly format.

Q12. What is the treatment of provisos,numerous explanations,‘provisos’ and procedures?‘explanations’ and procedural aspects in the existing Act?

Ans: AllProvisos provisos(more than 1200) and explanationsExplanations (more than 900) have been removed;removed, with their simplified content is now placed as subsectionssub-sections or clauses. ProceduralWherever feasible, procedural aspects willand specific details are proposed to be movedprovided toby way of Rules.

Q13. Have the redundant provisions of the Income-tax Act 1961 been removed?removed in the new Income-tax Bill?

Ans: Yes. ObsoleteCertain provisions became redundant due to numerous amendments and/or policy changes over the years. This resulted in large number of such asprovisions in the Act. For example, deduction under section 10A10A, (which endedwas AYa special provision for newly established industrial undertakings in the free trade zones, is no longer available from the Assessment Year 2012-13)13, onwards. Such obsolete provisions have been removed.removed Old-yearfrom applicabilitythe istext protectedof underthe Bill. However, provisions applicable to earlier Assessment Years shall be governed by Repeal and Savings.Savings provisions.

Q14. What other steps have been taken to enhance clarity?clarity in the new Bill?

Ans: UseIn addition to removal of ‘provisos’, ‘explanation’ and redundant provisions, formulae, tables, aggregationand structures have been used to enhance clarity in the new bill. To the extent possible, provisions involving the same issues, which were present in different chapters in the current Act, have now been consolidated. Redundancy has been removed and definitions at multiple places have been consolidated.

In case of provisions scatteredrelating earlier,to consolidationNon-Profit oforganisations definitions,(NPOs), the entire text related to NPOs has been consolidated and restructuring of NPO-related textstructured into 7 sub-parts.parts which contain provisions related to Registration, Income, Commercial activities, Compliances, Violations, Registrations for the purposes of eligibility of donations and Interpretations.

Q15. How have principles of taxTax certaintyCertainty beenfollowed ensured?in drafting of the new Income Tax Bill?

Ans: a.The Importantnew judiciallyIncome-tax interpretedBill termsis retained.approximately b.half Usethe length of the existing Income-tax Act 1961, with significant re-organisation of provisions in different sections. While undertaking simplification exercise, a conscious attempt has been made to minimise the scope of litigation and fresh interpretations. For this purpose:

1. Key words/phrases, especially where courts have given rulings, have been retained with minimal modifications.
2. Language has been simplified by use of short sentences.sentences c.to the extent possible.
3. Sections simplifiedhave usingbeen tables.translated d.into Removalrow or sub-rows in tables, reducing the number of words and bringing clarity.
4. Provisions have been made clear to minimize scope for multiple interpretations. The provisos and explanations.explanations e.have Internationalbeen removed and simplified content has been placed as sub-sections and clauses.
5. Provisions related to international taxation provisionshave madebeen clearer.dealt f.with, broadly, to ensure tax certainty.
6. NGO chapter rewrittenhas inbeen made more comprehensive with use of plain language.
g.
7. Exemption Exemption-relatedsections, for example section 10 in the present Act, has been made simpler through tables and placing large number of provisions placedin Schedules.
8. Formulae and tables have been used to enhance clarity, wherever feasible.
   
9. Provisions involving same issues and definitions, which were present in schedules.different h.chapters Usein ofthe formulaeexisting andAct consolidationhave ofbeen definitions.consolidated, to the extent possible.
   
   

Q16. Comparison of new Bill with the 1961 Act

Chapters: There has been a significant reduction in the text of new Bill, in comparison to the existing Income Tax Act, as summarised below.

→23Sections: →536Words: →

Particulars	Income-tax Act, 1961	The proposed Act
Chapters	47	23
Sections	819*	536
Words	5.12 lakhlakhs	2.60 lakhlakhs

*Effective sectionsSections
Besides (including alpha-numeric sections). Aboutabout 1200 provisosProvisos and 900 explanationsExplanations have been removed.

Q17. WhyWhat doesis the basis of the statement that the Income tax Act, 1961 consists of 819 sections, while the text of the Act haveonly 819mentions sections when numbering stops attill 298?

Ans: NumerousDuring insertionsthe overcourse timeof (e.g.,numerous 115AC,amendments to the Income tax Act, 1961, several policy decisions were incorporated as separate provisions. Many a times such provisions were connected to already existing sections and accordingly the new sections were numbered in continuation to the existing sections. For example, several provisions relating to tax on special cases were inserted as sections starting with 115 series viz 115 AC,115AD, 115JB, 115VP etc.) createdAs alpha-numerica sections,result increasingof such insertions, effective count.sections existing in the Income tax Act, 1961 are 819.

Q18. Why does the new Bill still havecontain 536 sections and 2.6 lakh words?

Ans: While the existing Income-tax Act contains 298 numbered sections, effective sections in the current Act are 819. This is because other than numeric section numbers there are large number of sections with alpha-numeric codes such as 115A to 115WM (117 sections) and so on. The Income-tax Act coversnot administration,only assessments,deals with levy of tax but it is a comprehensive document, which encompasses all aspects of tax administration. It also includes other aspects such as:

(a) laying down the administrative framework, assigning roles and responsibilities for assessing officers, taxpayers, tax deductors, and professionals etc;
(b) setting out the framework for income determination, timelines, appellate procedures, enforcement, penalties,assessments, and penalties; and
(c) taking into account the impact of interpretations on economic policy, affecting both domestic and international investments.

The new Bill proposes 536 sections to meet the above-mentioned requirements. Further, several sections in the new Bill exist primarily to honour the commitments under the existing regimes.tax Manyregime, including provisions continuerelating to Minimum Alternate Tax (MAT), various deductions and exemptions, etc. These provisions will remain in force until their respective

sunset dates,clauses requiringtake inclusion.effect. Therefore, these are required to be part of new Bill to ensure a smooth
transition, while maintaining legal and policy continuity.

Q19. HasWhether the simplification exercise has led to ‘no material‘material’ change’?change?

Ans: MaterialThe structuralsimplification changesexercise, exist—removalinter-alia, encompasses following aspects:

1. Redundant provisions of redundancies,the simplificationIncome tax Act have been removed;
2. Sub-sections and clauses have been used, instead of language,relying on provisos and explanations for exceptions and carve-outs;
3. Simplified system for cross referencing of sections, sub-sections, clauses etc has been used;
4. Extensive use of tables, consolidationformulae for enhanced clarity;
5. Consolidation of relatedprovisions provisions.scattered Noacross various sections/ Chapters relating to a single issue; etc

Since there have been regular amendments to the Income Tax Act, 1961 including amendments proposed in Finance Bill, 2025, the Act stands updated from policy perspective. All amendments proposed upto Finance Bill 2025 have been duly incorporated in the new Income tax bill 2025. Therefore, while no major policy related changes werehave been made sincein policythe Bill, the above aspects have led to proposed ‘material’ changes arein updatedthe annuallyexisting through Finance Bills.law.

Q20. WillWhether any mapping of old and new sections will be available?

Ans: Yes,Section-wise mapping will be made available on the official website of the Income Tax Department’s website.Department.

Q21. How arehas 'previous year' and 'assessment year' been dealt with in the new bill?

Ans: The concept of ‘tax year’ has been introduced replacing ‘previous year’ and ‘assessment year’. treated?

Ans: Replaced by ‘Tax Year’ for income computation. ‘Financial Year’ remains forThe timelines and procedure.computation in the Bill are now with reference to the financial year for which the income is liable to be taxed. It is expected that the use of ‘tax year’ will make the new Bill easier to comprehend. Further, many of the comparable tax jurisdictions in the world are using one single term, for purpose of denoting the unit period of taxation. ‘Tax year’ is commonly used in many countries.

With the introduction of ‘tax year’, broadly the following principles have been adopted:

1. ‘Tax Year’: Unit period of taxation. This term shall be referred in respect of all transactions and income for that period.
2. ‘Financial Year’: For purposes of timelines for compliance and for procedural issues.
   
   

Q22. How arehave TDS/TCSthe provisions simplified?of TDS and TCS been simplified in the new bill?

Ans: PresentedTDS inand tables,TCS separatedprovisions have been made easier to comprehend by providing tables. There are separate tables for payment to residents and non-residents.residents, Exampleand where no deduction at source is required. For example, the proposed provisions relating to TDS on rent are shown below:

→ →

2.	Rent
S. No.	Nature of Income or sum	Payer	Rate Threshold limit
(rent):i)	Income by way of rent	Person other than specified person	Rate: 2% → Threshold limit: Rs. 50,000/000 for a month threshold.or part of a month

(Reference can be made to Table in proposed section 393 of the Bill)

Q23. HowWhat havehas NPObeen done to simplify the provisions beenrelated simplified?to Non-Profit
Organizations? 

Ans: EarlierThe provisions fromrelated multipleto sectionsNon-Profit Organizations were present at different places in the existing Act, in section 11, section 12, section 12A, section 12AA, section 12AB, section 13, section 115BBC, section 115BBI, section 115TD, section 115TE, section 115TF. The provisions related to approval are under the first and second proviso to section 80G (5). These have been simplified and consolidated into one chapter. All the provisions related to registered Non-Profit Organisations have now been arranged in Part B of Chapter XVII titled “B.–– Special Provisions for Registered Non-Profit Organisation”. in the new Bill.

Q24. What simplification has been donecarried out for salaried employees?employees in the new bill?

Ans: SalaryAll the provisions consolidated;pertaining to salary have been consolidated at one place for ease of understanding so that the taxpayer does not have to refer to separate chapters for filing his return of income. The deductions which were earlier allowed under old section 10 movedof intothe Income Tax Act,1961, like gratuity, leave encashment, commutation of pension, compensation on VRS and retrenchment compensation, are now part of the salary chapter;chapter itself. Some of the allowances placedlike HRA are now provided in Schedule II;II perquisiteof valuationthe new Bill that finds reference in the provisions relating to salary. The objective was to improve readability by way of providing tables and formulas.

While the chargeability of all the perquisites has been retained in the Act, their valuation, conditions and exceptions have been shifted to Rules;Rules as they do not affect every taxpayer. Similarly, redundant and repetitive provisions removed.have also been removed for better readability.

Q25. What changes are made to exemptions for incomes and persons?

Ans: MovedProvisions relating to Schedulesexemptions II–VII.for specific incomes and persons are being moved to separate schedules for easier reference and simpler compliance as follows:

Examples:

• Schedule II (16 rows) – ExemptIncomes incomesexempt (e.g.,such as agricultural income)
• income
  Schedule III (39 rows) – PersonsCertain persons eligible for exemption (e.g.,on HUFcertain partners)
income
• such as partners of firms and HUF, etc.
  Schedule IV (14 rows) – Non-residentExemptions exemptions
to
• non-residents
  Schedule V (8 rows) – BusinessExemption to business trusts, sovereignSovereign funds
Wealth
• Funds, etc.
  Schedule VI (12 rows) – Exemptions to IFSC exemptions
• units
  Schedule VII (48 rows) – Persons fullyexempt exempt
from

tax

Example:An example of the Schedules is given below:

Sl. No.	Eligible persons	Conditions
A	B	C
1.	Any regimental Fund or non-public fundFund ofestablished by the armed forces →of Forthe Union	Such Fund is for the welfare of the past and present members of the armed forces or their dependants.

Q26. What are the next steps after introduction of the Bill?

new Bill is introduced?

Ans: Stage 1: PassageBill is passed by Parliament.the

Parliament

and becomes an Act
Stage 2: Operational and delegated legislation framework

1. Notification of new Rules and Forms;Forms.
2. Simultaneous exercise of software systemdevelopment updatesto set up the systems and processes for various administrative and quasi-judicial functions.
   
   

Q27. How will the old and new provisions co-exist? 

Ans: Various facets of compliance for the respective years have been mentioned in the Repeals and Savings clause protectsin the Bill, which will safeguard all rights and liabilities foraccrued earlierunder years.the old law.

Q28. AreWhat thereare the changes inon rates orand policy?other policy in the new bill?

Ans: NoThere rateare changes.no changes related to rates. Since there have been regular amendments to the Income Tax Act, 1961 including amendments proposed in Finance Bill, 2025, the Act stands updated from policy perspective. All amendments upproposed toupto Finance Bill 2025 have been incorporated.duly Structuralincorporated in the new Income tax bill 2025. Therefore, while no major policy related changes only.have been made in the Bill, the above aspects have led to proposed ‘material’ changes in the existing law.

Q29. Why dois it that on comparison of new Income Tax Bill and earlier provisions, it is found that in some provisionscases (e.g.,viz ‘virtual digital assets)assets’, seemetc different?there are certain changes?

Ans: The Income Tax Bill includes2025 also contains all amendments already proposed in Finance Bill 2025. ComparisonsTherefore, mustthe beusers madeare advised to compare the provisions of the Income Tax Act, 1961, as updated with proposed amendments in Finance bill 2025, while reading the updatedIncome 1961Tax ActBill, including2025. 2025There proposals.is, therefore, no change in the scope of ‘virtual digital asset’ under the Income Tax Bill, 2025. The definition under the Bill incorporates the amendment already proposed under the Finance Bill, 2025.

Q30. Which chaptersChapters sawof the largestIncome tax Act, 1961 have seen large reduction inof words?words,
as a result of the simplification exercise?

Examples:Ans: As noted above, the total words in the new Income Tax Bill, 2025 are around 2.6 lakhs, as against 5.12 lakh words in the Income Tax Act, 1961. Some of the Chapters where substantial reduction of words have been achieved are as given below:

→ (reduction16500) →(reduction12847) → (reduction5200)

Income Tax Act, 1961		Income Tax Bill, 2025		Reduction of words
Topic	Words	Topic	Words
Exemption provisions:related provision	30000	Exemption related provision	13500	16500
TDS/TCS:TCS	27453	TDS/TCS	14606	12847
Non-profit organisations:Organization	12800	Non-profit Organization	7600	5200