A new income tax bill will be presented during the monsoon season: FM Sitharaman
Finance Minister Nirmala Sitharaman informed the Lok Sabha on Tuesday that the revised Income Tax Bill would be discussed during the Monsoon session of Parliament.
The six-decade-old Income Tax Act, 1961 will be replaced by the Income-tax Bill, 2025, which will simplify direct tax regulations, eliminate ambiguities, and decrease tax disputes.
According to the Finance Ministry, three fundamental principles served as the basis for the simplification process: maintaining continuity and certainty, avoiding significant changes to tax policy, and avoiding changes to tax rates in order to maintain predictability for taxpayers. Textual and structural simplification was also implemented to improve clarity and coherence.
The Bill, which is based on international best practices, intends to make doing business easier by offering a straightforward and understandable tax structure. As a result, the Act’s volume has significantly decreased, making it easier to read and understand. From the enormous 512,535 words in the previous Income Tax Act, the new Income Tax Bill now only has 259,676 words. According to an official statement, this nearly 50% cut has led to a reduction of 252,859 words.
As a result, the new Income Tax Bill now comprises 23 chapters instead of the 47 in the previous Income Tax Act. According to the statement, the number of sections has also been reduced from 819 to 536, which has led to the removal of up to 283 sections.
This significant decrease has been brought about by the simplicity of the language, which has made the legislation easier to understand, and the consolidation of modifications, which has lessened fragmentation.
According to the statement, a three-pronged strategy was used, with an emphasis on rearranging sections logically to make them easier to refer to, removing superfluous and repeating provisions for improved navigation, and removing complex language to improve readability.
Additionally, tables and formulas have been used to rationalize the structure for better reading. According to the statement, maintaining current taxation principles has improved usability while guaranteeing continuity.
In order to identify best practices, industry and tax specialists were consulted, and simplification approaches from Australia and the UK were examined.
By consulting taxpayers, companies, trade associations, and professional associations, the government also made sure that all stakeholders were widely involved. Relevant suggestions were reviewed and, when possible, included out of the 20,976 online suggestions that were submitted.
