New Income Tax Bill to be Tabled Soon – Here’s What You Need to Know!

The Budget Session of Parliament resumed on Monday, 10 February 2025, and one of the most anticipated developments is the tabling of the new Income Tax Bill. Cleared by the Union Cabinet last week as per reports, the bill is expected to be introduced in the Lok Sabha soon. Even if it is not presented today, discussions around the bill are likely to stir significant debate in Parliament.

The Union Budget 2025 had already indicated that the Ministry of Finance would present the new tax bill to the Union Cabinet this week. At a press conference following the Budget, Finance Minister Nirmala Sitharaman expressed optimism that the bill would pass without major hurdles. The government has assured that the new legislation will be 50% shorter than the existing tax code, with improved clarity and simplified provisions.

What is the New Income Tax Bill?

The proposed Income Tax Bill aims to replace the Income Tax Act of 1961 with a modern and streamlined version of tax laws. The primary goal is to eliminate ambiguity, reduce legal complexities, and improve transparency in tax regulations.

One of the most notable aspects of the bill is its concise structure—the government intends to halve the length of the current tax legislation while ensuring that its provisions remain comprehensive. This simplification will make it easier for taxpayers to understand their obligations without relying heavily on tax professionals.

According to Finance Secretary Tuhin Kanta Pandey, the new bill will remove complex legal jargon, making interpretation simpler and reducing the scope for tax disputes. The initiative aligns with the government’s broader vision of improving the ease of doing business in India.

Key Highlights: How the New Bill Simplifies Tax Laws

1. Removal of Outdated Provisions

The current Income Tax Act of 1961 consists of 298 sections spread across 23 chapters. Over the years, multiple amendments have been made, leading to overlapping provisions and redundant taxes. The new bill aims to eliminate outdated sections and streamline the tax framework.

Notably, India has already abolished several taxes such as:

• Wealth tax
• Gift tax
• Fringe benefit tax

These removals have simplified tax compliance, and the upcoming bill is expected to continue in this direction by discarding provisions that no longer serve a practical purpose.

2. Clarity Through Simplified Language

A major challenge with existing tax laws is their complex wording and extensive cross-referencing, which makes interpretation difficult. The new bill seeks to:
Use clear and direct language to make tax laws more accessible.
Reduce legal disputes caused by misinterpretation of provisions.
Ensure taxpayers can independently understand their liabilities without excessive dependence on legal professionals.

3. Lower Legal Disputes and Tax Litigation

The government aims to address long-standing tax disputes by providing greater certainty in tax provisions. Currently, many corporate and individual taxpayers are engaged in litigation due to unclear tax laws. With simplified rules and fewer ambiguous provisions, the new Income Tax Bill is expected to minimise tax-related court cases.

4. Alignment with Global Best Practices

Several developed economies have shifted to simpler tax regimes that encourage compliance and reduce tax evasion. The new bill is expected to align India’s tax structure with global standards, making it easier for both domestic and foreign investors to navigate the system.

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