New Income Tax Bill The government is preparing to introduce a new Income Tax Bill in the next budget session, which will replace the old Income Tax Act of 1961. This major legislative initiative will bring clarity, simplicity and modernization to India’s tax laws, which will give a new direction to our financial and administrative framework.
New Start: Need for a New Law
The proposed legislation will not be just an amendment, but a completely new law, which will simplify the existing tax framework. Finance Minister Nirmala Sitharaman had announced a comprehensive review of the old Income Tax Act in the Union Budget of July 2024. The aim of this review is to shorten and modernize the law by about 60%.
The government’s aim is to make these new rules easier for people and businesses and reduce disputes and litigation. According to a government source, the draft of the new law is under review by the Law Ministry and will be tabled in the second part of the budget session.
Important Dates of Budget Session
The budget session of 2025 will be held in two parts between January 31 and April 4:
1. First Part (January 31 to February 13):
• President Draupadi Murmu will address the joint sitting of Lok Sabha and Rajya Sabha.
• Economic Survey for FY 2024-25 will be presented.
• Union Budget for FY 2025-26 will be unveiled on February 1.
2. Second Part (March 10 to April 4):
In this phase, budget-related bills, including the new Income Tax Bill, will be discussed and passed.
Role of CBDT
The Central Board of Direct Taxes (CBDT) is playing a major role in shaping the new law. After Sitharaman’s announcement, CBDT formed an internal committee to simplify the Income Tax Act.
Public suggestions were also taken into consideration, and the government took inputs from people in four categories:
1. Simplification of language.
2. Reducing litigation.
3. Reducing compliance burden.
4. Removing old and irrelevant provisions.
So far more than 6,500 suggestions have been received, which show people’s interest and participation in this process.
What will be in the new law?
The new Income Tax Bill will streamline the system by removing old and irrelevant provisions. The current Income Tax Act comprises 298 sections and 23 chapters, which cover different taxes such as personal income tax, corporate tax, and gift tax. The new bill will focus on making the law concise and relevant by reducing complexity.
Impact on Taxpayers and Businesses
If this law is passed, then:
• Compliance will be easy: It will become easier for taxpayers to understand and follow the law.
• Litigation will be reduced: Clear laws will reduce disputes and legal issues.
• Transparency will increase: Trust will be increased by removing redundant provisions.
• Investments will get encouragement: Simplified tax regime will attract foreign and domestic investments.
Towards a Modern Tax System
The new Income Tax Bill is a major effort to bring India’s tax system closer to global standards. It will create a tax regime with a focus on clarity, simplicity and fairness that will cater to the aspirations of a growing economy.
The introduction of the new Income Tax Bill in the Budget session will be one of the most anticipated developments, which will usher in a new era in India’s fiscal policy.
