New Direct Tax Code (DTC) has been in discussions for a long time. Meanwhile in budget speech on 1st Feb 2025, FM Mrs. Nirmala Sitharaman mentioned that Direct Tax Code coming soon. From there the it became certain that it is going to be put before the parliament within week or two. Finally, The Income Tax Bill 2025 scheduled to introduced in Lok Sabha on 13th February 2025.
Let us discuss, what are the key points of New Direct Tax Code 2025 through some Q&As
Please note that the information is based on proposed Income Tax Bill 2025 and are subject to approval in parliament.
Will New Income Tax 2025 change the tax slab and tax rates?
Direct Tax Code not expected to bring any change in tax rates or tax slabs. I.e. tax rates expected to remain same per budget speech on 1st February 2025 by FM Mrs Nirmala Sitharaman.
Tax slab for Individuals, Hindu Undivided Family, AOP, BOI under New Tax Regime
| Sr. No. | Total Income (Rs.) | Tax Rate |
| 1 | Up to 4,00,000 | Nil |
| 2 | 4,00,001 to 8,00,000 | 5% |
| 3 | 8,00,001 to 12,00,000 | 10% |
| 4 | 12,00,001 to 16,00,000 | 15% |
| 5 | 16,00,001 to 20,00,000 | 20% |
| 6 | 20,00,001 to 24,00,000 | 25% |
| 7 | Above 24,00,000 | 30% |
Tax slab under Old Tax Regime for Individuals, Hindu Undivided Family, AOP, BOI
| Sr. No. | Total Income (Rs.) | Tax Rate |
| 1 | Up to 2,50,000 | Nil |
| 2 | 2,50,001 to 5,00,000 | 5% |
| 3 | 5,00,001 to 10,00,000 | 20% |
| 4 | Above 10,00,000 | 30% |
Tax rate for domestic companies are 15%/22%/25%/30% subject to conditions specified in Direct Tax Code 2025
Is there any change in Capital Gain Tax rates in Direct Tax Code?
No change expected in Rate of Tax of Short-Term Capital Gain and Long-Term Capital Gain. For capital gain on transfer of equity shares, units of equity-oriented funds, unit in business trust which are subject to securities transaction tax (STT) the Tax on Short-Term Capital Gain is expected to remain 20%. Similarly, no change for Short Term Gains tax, it will be chargeable as per the slab rates (considering it part of total income)
Long-Term Capital Gain also expected to remain same. i.e. 12.5%
For Long Term capital asset being land or building or both sold before 23rd July 2024 an individual or HUF assessee being a resident can claim the benefit of indexation, however tax rate on such Long-Term Capital gain will be 20%.
Are the concepts of Previous Year and Assessment still there in New Income Tax Bill 2025?
Concept of Previous Year and Assessment year used to create confusion for many of us. Further, dis-aligns with terminology used internationally. Hence, government has now introduced the term “Tax Year” in line with terminology used by many other countries.
Tax year means the period of 12 months of financial year starting from 1st April.
However, in case of newly setup business or profession or source of income newly coming into existence Tax Year shall begin from date of commencement of business or date on which new source of income come into existence and ending with the said financial year.
Who can do Tax Audit of the eligible assessee?
Tax Audit of eligible assessee conducted by Accountants. Here “accountant” means a chartered accountant as defined in section 2(1)(b) of the Chartered Accountants Act, 1949, who holds a valid certificate of practice under section 6(1) of that Act, subject to some exclusions.
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