Seeking Stakeholders’ Input for Drafting Income Tax Rules and Related Forms Consequent to the Income Tax Bill, 2025
The Income Tax Bill, 2025 has been introduced in Parliament and is currently under examination by the Select Committee for detailed consideration. Stakeholders are encouraged to continue submitting their suggestions on the provisions of the Bill, which will be compiled and forwarded to the Select Committee for its review.
In alignment with the comprehensive review of the Income-tax Act, 1961, an effort is underway to collect inputs and work on simplifying the associated Income Tax Rules and Forms. The objective of this initiative is to enhance clarity, reduce the compliance burden, and eliminate obsolete rules, making tax processes more accessible for taxpayers and other stakeholders. Additionally, streamlining the Rules and Forms aims to simplify tax compliance, improve taxpayer comprehension and ease of filing, lower administrative burdens and errors, and enhance transparency and efficiency.
To facilitate this, a utility has been launched on the e-filing portal, which can be accessed through the following link: E-Filing Portal.
The above link is live and accessible to all stakeholders from March 8, 2025, on the e-filing portal. Stakeholders can submit their inputs by entering their name and mobile number, followed by an OTP-based validation process.
All suggestions should clearly specify the relevant provision of the Income-tax Rules, 1962 (including the specific section, sub-section, clause, rule, sub-rule, or form number) to which the recommendation pertains under the aforementioned four categories.
(V. Rajitha) Commissioner of Income Tax (Media & Technical Policy) & Official Spokesperson, CBDT
The highlight of the two meetings of the select committee of the Lok Sabha, tasked with examining the Income Tax Bill, 2025, has been suggestions that the panel could recommend expanding the definition of ‘accountant’ to include other professionals, especially company secretaries and cost accountants.
A significant discussion is unfolding within the corridors of the Lok Sabha’s select committee examining the Income Tax Bill, 2025: the potential expansion of the definition of “accountant.” This seemingly technical adjustment carries significant implications for the professional landscape and the future of tax compliance.
Currently, the Income Tax Act primarily recognizes chartered accountants as “accountants” for specific purposes. However, the select committee is considering broadening this definition to include other financial professionals, notably company secretaries and cost accountants. This potential change has sparked a lively debate, pitting professional bodies against each other and raising questions about the scope of expertise required for tax-related functions.
The Heart of the Matter: Expertise and Recognition
The crux of the issue revolves around the recognition of diverse professional expertise. Proponents of expanding the definition argue that company secretaries and cost accountants possess specialized knowledge relevant to tax compliance and financial reporting. They contend that their inclusion would streamline processes and enhance efficiency.
Conversely, the Institute of Chartered Accountants of India (ICAI) has voiced strong opposition to this expansion. The ICAI argues that chartered accountants possess the comprehensive training and expertise necessary for all aspects of tax compliance. They express concerns that broadening the definition could dilute the standards of professional practice.
The 31-member Lok Sabha select committee, tasked with scrutinizing the Income Tax Bill, is currently weighing these arguments. While the bill, as introduced, maintains the existing narrow definition, indications suggest that some panel members are inclined to support the government’s perspective on broadening the definition.
The panel’s deliberations are taking place within the broader context of the Income Tax Bill, 2025, which aims to simplify tax laws and address the evolving financial landscape, including the taxation of virtual digital assets.
The decision on the definition of “accountant” will have far-reaching consequences for the implementation of the bill and the roles of various financial professionals.
Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
The newly tabled Income Tax Bill aims to simplify Tax Laws for:
✅Enhanced Clarity, aiming at encouraging voluntary compliances ✅Minimizing the scope for multiple interpretations ✅Improving readability and understanding.
A detailed Samvaad session with the head of the drafting committee, Sh. VK Gupta, IRS can be seen here:
The Income Tax Bill 2025 has introduced a significant shift in India’s tax policy, aiming to bring farming and dairy earnings under the tax net. For decades, agricultural income has enjoyed tax exemptions, but the government is now revising these rules to curb misuse and improve tax compliance.
Many farmers, agricultural entrepreneurs, and dairy business owners are concerned about how this change will affect their finances. In this article, we’ll break down the new tax policies, explain their impact, and offer practical advice on how to stay compliant while maximizing deductions.
Income Tax Bill 2025
Aspect
Details
New Tax Rule
Farming and dairy income above a certain threshold will now be taxable
Who is Affected?
Farmers, dairy businesses, agripreneurs, and large-scale agricultural enterprises
Tax Rate
Progressive taxation based on income slabs
Exemptions
Small farmers with earnings below the set threshold will remain tax-free
The Income Tax Bill 2025 introduces a historic change by taxing high-income farming and dairy earnings. While small farmers remain exempt, large agricultural enterprises must prepare for tax compliance. By maintaining proper records, using deductions, and reinvesting in agriculture, farmers can minimize their tax burden while contributing to national revenue. For more details, stay updated with Income Tax Department announcements!
Understanding the Change: Why Tax Farming & Dairy Earnings?
Historically, agricultural income has been exempt from tax to support small farmers and promote the agricultural sector. However, over the years, many high-income earners have misused this exemption by falsely classifying non-agricultural earnings as farm income.
The new bill aims to:
Ensure fair taxation – Large-scale farmers and agribusinesses that earn substantial profits will contribute their fair share.
Prevent tax evasion – This closes loopholes where non-farmers declare farm earnings to avoid taxes.
Boost government revenue – Additional tax revenue will be used for agricultural development and infrastructure.
Who Will Be Taxed?
Not all farmers and dairy owners will be affected. The bill introduces income thresholds, meaning only those earning above a certain limit will need to pay taxes.
Taxable Groups:
Large-scale corporate farms and agribusinesses
Dairy businesses with substantial profits
Farmers selling processed or value-added products
Landowners leasing large tracts for commercial farming
Exempt Groups:
Small and marginal farmers with income below the set threshold
Families engaged in subsistence farming
Farmers earning purely from traditional crop sales without large-scale profits
How Will Agricultural Income Be Taxed?
The Income Tax Bill 2025 proposes a progressive tax system for agricultural earnings. Here’s a simplified breakdown:
Income Slab (Annual)
Tax Rate
Up to ₹2.5 lakh
0% (Exempt)
₹2.5 lakh – ₹5 lakh
5%
₹5 lakh – ₹10 lakh
10%
₹10 lakh – ₹25 lakh
20%
Above ₹25 lakh
30%
This structure ensures that only high-income agricultural businesses pay taxes, while small farmers remain exempt.
How to Calculate Taxable Farming Income?
If you’re unsure whether your earnings will be taxed, follow this simple calculation method:
Identify Total Income – Add up your revenue from crop sales, dairy products, livestock, and agricultural services.
Deduct Expenses – Subtract costs like seeds, fertilizers, machinery, labor wages, transportation, and marketing.
Compute Net Profit – The final amount is your taxable income (if above ₹2.5 lakh).
Apply Tax Slab – Use the table above to determine how much tax you owe.
Ways to Reduce Tax Liability (Legally!)
There are still several deductions and exemptions you can use to lower your tax burden. Here’s how:
Depreciation Benefits – Machinery and farming equipment costs can be written off over time.
Investment in Agri-Tech – Money spent on technology, irrigation, and sustainable farming qualifies for deductions.
Reinvestment Exemptions – If profits are reinvested into agriculture, they might be tax-exempt.
Government Subsidies – Certain subsidized projects and schemes reduce taxable income.
How to Stay Compliant?
If you’re farming or dairy income is taxable, follow these steps to avoid penalties:
Maintain Proper Records – Keep track of all income, expenses, and sales receipts. ✔ File Taxes Annually – Ensure timely submission of Income Tax Returns (ITR). ✔ Consult a Tax Expert – Professional guidance can help you maximize deductions and stay compliant. ✔ Use Digital Payment Methods – Transactions through banks provide a clear record for tax authorities.
FAQs On Income Tax Bill 2025
1. Will small farmers have to pay tax?
No, farmers with an annual income below ₹2.5 lakh will remain exempt from taxes.
2. Does this apply to dairy farmers as well?
Yes, but only large-scale dairy businesses will be taxed. Small-scale dairy farmers remain exempt.
3. Can farmers claim deductions?
Yes! Expenses related to seeds, fertilizers, labor, and machinery can be deducted from taxable income.
4. Will leased farmland income be taxed?
Yes, large landowners leasing agricultural land for commercial farming will be taxed on rental income.
5. Where can I get official information?
Visit the Income Tax Department for official updates and guidelines.
The new Income Tax Bill is poised to bring significant changes, particularly regarding the taxability of Non-Resident Indians (NRIs) who earn Rs. 15 lakh or more in India but do not pay taxes elsewhere. Sources anticipate that the bill may redefine the tax status of such individuals by classifying them as ‘residents’ for tax purposes. This shift would require NRIs to pay taxes in India, thereby curtailing the misuse of NRI status to evade tax liabilities while generating substantial income domestically. Importantly, only income earned within India would be taxed, excluding worldwide income.
Nuances in Residency Determination
In addition to the tax classification, the bill is expected to introduce complexities for residency determination in specific cases, particularly for individuals with multiple citizenships. It aims to provide clear guidance on such situations, ensuring fair treatment under tax laws.
Deemed Income Definition
Another significant aspect of the bill is the prospective definition of deemed income for NRIs. This framework will clarify how different types of income would be treated under tax laws, reducing ambiguity and ensuring that NRIs understand their tax obligations.
Framework for Taxable Income and Compliance
The forthcoming legislation is also anticipated to establish a detailed framework for defining taxable income, compliance requirements, and restrictions on non-profit commercial activities. Over the years, various rules concerning the taxability of charitable trusts have been introduced, which may be consolidated within this bill.
Taxation of Virtual Digital Assets
A noteworthy inclusion in the bill is the provision addressing the taxation of virtual digital assets, including cryptocurrency. It is expected to delineate the tax implications under short-term and long-term capital gains, income from other sources, and relevant tax categories. Explicit rules for the taxation of digital assets will provide much-needed clarity in this evolving space, as well as updated treatment for emerging asset classes like cryptocurrency.
Additionally, the bill may introduce regulations for online gaming and digital platforms, which are currently absent in existing legislation, particularly in light of recent legal developments.
Support for Start-ups
The bill might also propose dedicated provisions for start-ups, potentially offering a 100% tax exemption for the first three consecutive years within the first ten years of operation. This could encourage entrepreneurship and innovation in the country.
Reducing Litigation and Disputes
To mitigate litigation and disputes, the bill is expected to expand the dispute resolution committee for small taxpayers, facilitating amicable settlements. Moreover, it could propose measures to minimize repetitive litigation, addressing ongoing legal questions currently pending in various judicial settings, including High Courts and the Supreme Court.
Efficient Income Tax Assessments
When it comes to reassessing escaped income, the bill may suggest stricter timelines and codified procedures for issuing notices, ensuring a more efficient process for income tax assessments.
Comprehensive Anti-Avoidance Measures
Finally, the legislation is likely to include comprehensive anti-avoidance measures aimed at targeting impermissible arrangements and transactions lacking commercial substance. By implementing stricter checks against tax avoidance, it seeks to enhance the integrity of the tax system.
The upcoming Income Tax Bill promises to usher in a new era of clarity and fairness for NRIs and other stakeholders in the tax landscape, addressing key issues that have long required legislative attention. As discussions continue, it will be interesting to observe the final provisions of the bill and their implications for taxpayers in India and abroad.
The new Income Tax Bill, introduced in Parliament by Finance Minister Nirmala Sitharaman on Thursday, maintains the existing definition of “virtual digital assets” while incorporating the definition proposed in the Finance Bill 2025. This clarification was provided through a frequently asked questions (FAQ) document released by the income tax department, outlining the broad scope of the new Income Tax Bill.
According to the FAQ, “The Income Tax Bill 2025 also contains all amendments proposed in Finance Bill 2025. Therefore, users are advised to compare the provisions of the Income Tax Act, 1961, with the proposed amendments in Finance Bill 2025 while reading the Income Tax Bill, 2025.” It emphasized that there is no change in the scope of ‘virtual digital assets’ under the new Income Tax Bill.
The definition included in the Bill reflects the amendment already proposed in the Finance Bill, 2025. This proposal aims to broaden the definition of virtual digital assets to encompass any crypto-asset that represents digital value, relying on a cryptographically secured distributed ledger or similar technology for validating and securing transactions—regardless of whether they fall under the existing definition of virtual digital assets. This amendment, which is part of a newly proposed reporting framework for crypto assets, is set to take effect from April 1, 2026.
Additionally, the definition of ‘undisclosed income’ for search and seizure proceedings has been expanded to include virtual digital assets. Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, noted that this extended definition aims to align with the definition of Crypto Assets within the Crypto-Asset Reporting Framework (CARF) established by the OECD.
Vikram Subburaj, CEO of Giottus Crypto Platform, heralded this development as a positive step towards establishing a well-regulated crypto environment in India. He stated, “Clear definitions like these and reporting frameworks will lead to more constructive dialogue on taxation, compliance, and innovation. This will help India navigate the future of tokenized assets, decentralized finance (DeFi), and Web3 at a much faster pace.”
