We apply the new formulation of heavy quark effective field theory (HQEFT) to the inclusive decays of bottom hadrons. The long-term ambiguity of using heavy quark mass or heavy hadron mass for inclusive decays is clarified within the framework of the new formulation of HQEFT. The 1/m b order corrections are absent and contributions from 1/m 2 b terms are calculated in detail. This enables us to reliably extract the important CKM matrix element |V cb | from the inclusive semileptonic decay rates. The resulting lifetime ratios τ (B 0 s )/τ (B 0 ) and τ(Λ b )/τ (B 0 ) are found to well agree with the experimental data. We also calculate in detail the inclusive semileptonic branching ratios and the ratios of the τ and β decay rates as well as the charm countings in the B 0 , B 0 s and Λ b systems. For B 0 decays, all the observables are found to be consistent with the experimental data. More precise data for the B 0 decays and further experimental measurements for the B 0 s and Λ b systems will be very useful for testing the framework of new formulation of HQEFT at the level of higher order corrections.