Union Budget 2025: New Income Tax Bill to be Introduced in Parliament Next Week Says FM Sitharaman

A major reform in India’s taxation system is set to take place with the introduction of a new Income Tax Bill, Finance Minister Nirmala Sitharaman announced on Saturday, February 01, 2025, during her Union Budget 2025 presentation.

The new bill aims to simplify the country’s existing Income Tax laws, enhance convenience for citizens, and ensure greater clarity for the general public.

New Income Tax Law to Replace 1961 Act

This new Income Tax Bill is set to be a completely new law, not an amendment of the existing Income Tax Act of 1961. The existing Act, which has 23 chapters and 298 sections, has been in use for over six decades.

Finance Minister Sitharaman had previously announced a comprehensive review of the law in the July 2024 Budget after the Lok Sabha elections, promising a complete overhaul within six months.

Currently, the draft of the new bill is being reviewed by the Law Ministry. The new law, once passed, will simplify the processes involved in calculating and filing income taxes, making it more efficient for both taxpayers and tax authorities.

A Shift Towards Simplification and Transparency

In her address, Nirmala Sitharaman revealed that the government plans to introduce a new Income Tax Bill in Parliament next week.

The proposed bill is expected to reduce the volume of the existing law by approximately 60%, making it more comprehensible and user-friendly. Sitharaman emphasised that the new law would be “clear and direct in wording,” replacing the current complex framework.

“The new Income Tax Bill will be half of the current volume; clear and direct in wording,” the Finance Minister stated, elaborating on the government’s commitment to reducing bureaucratic hurdles. She also mentioned that the bill would be based on the principle of “trust first, scrutinise later,” underlining the government’s efforts to promote transparency and ease of compliance.

Continued Reforms for Ease of Taxation

The announcement of the new Income Tax Bill comes after a decade of significant reforms aimed at improving taxpayer convenience. Sitharaman highlighted several steps taken by the government in recent years, including the introduction of faceless assessments, as part of efforts to streamline the tax filing system and make it more taxpayer-friendly.

With the introduction of this new bill, the government continues its focus on simplifying the tax system and fostering an environment of trust and transparency.

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