Govt Likely to Present New Simplified Income Tax Bill in Budget Session

The government will likely introduce a new income tax bill during the upcoming Budget session of Parliament. This significant development aims to simplify the existing Income Tax Act, 1961, by making it more concise, easier to understand, and user-friendly for taxpayers. The proposed changes could reduce the act’s length by approximately 60%.

In her July Budget statement, Finance Minister Nirmala Sitharaman declared that the tax laws that have been in place for six decades would be thoroughly reviewed. She emphasized the need for a simplified framework to minimize disputes and litigation while ensuring greater tax certainty. Following this announcement, an internal committee was formed under the Central Board of Direct Taxes (CBDT) to oversee the review process.

To achieve its goal, the government established 22 specialized sub-committees to examine various aspects of the Act. Public input was also sought in areas such as simplifying language, reducing compliance requirements, minimizing litigation, and removing outdated provisions. In response, the Income Tax Department received over 6,500 suggestions from stakeholders, reflecting widespread interest in the reform.

The new law is expected to replace the current Income Tax Act rather than amend it. According to sources, the draft legislation has been sent to the law ministry for vetting will most likely be introduced in the second half of the Budget session, which runs from January 31 to April 4. The session will commence with President Droupadi Murmu’s address to Parliament. This will be followed by the tabling of the Economic Survey on January 31 and the Union Budget for 2025-26 will be presented on February 1.

The revised income tax framework aims to eliminate redundant provisions while reducing the current Act’s 298 sections and 23 chapters significantly. By making the law more concise and transparent, the government seeks to alleviate the burden on taxpayers and foster a more efficient tax administration system.

In Conclusion

The new bill represents a pivotal step toward modernizing India’s tax landscape. It reflects the government’s commitment to creating a tax structure that is simpler, clearer, and aligned with current economic realities. By addressing long-standing complexities, the proposed legislation aims to build greater trust and confidence among taxpayers.

This initiative, if successfully implemented, could transform the way taxes are managed in India, offering a more accessible experience for individuals and businesses alike. It underscores the government’s focus on creating a forward-looking tax regime that meets contemporary needs while reducing compliance burdens.