The Indian government is preparing to introduce theNew Income Tax Bill, 2025, in the Lok Sabha, aiming to replace the existing Income Tax Act of 1961. This initiative seeks to modernize and simplify the nation’s tax laws, which have become intricate due to numerous amendments over the past six decades. The proposed bill comprises 536 sections and 16 schedules, spanning 622 pages, compared to the current law’s 298 sections and 14 schedules.
Finance Minister Nirmala Sitharaman has emphasized that the new bill is designed to be more concise and easier to understand. It introduces the concept of a ‘tax year,’ replacing the traditional terms ‘previous year’ and ‘assessment year,’ to simplify tax computations. Additionally, the bill aims to eliminate obsolete provisions and reduce legal ambiguities, thereby decreasing litigation and enhancing compliance.
However, concerns have been raised regarding the bill’s complexity. Congress Member of Parliament Manish Tewari has pointed out that, despite intentions to simplify, the new bill contains more sections and schedules than its predecessor. He noted that the previous law had 296 sections and 5 schedules, whereas the proposed legislation includes over 500 sections and 14 schedules. Tewari argues that this expansion may lead to increased complexity rather than simplification.
The government has indicated that the bill will undergo thorough scrutiny. After its introduction in the Lok Sabha, it is expected to be referred to a Select Committee for detailed examination. This process aims to ensure comprehensive consultations and address any concerns before the bill is enacted.
The proposed changes reflect the government’s commitment to updating the tax framework to align with current economic realities. By streamlining language and removing outdated provisions, the bill seeks to make tax laws more accessible to the general public. The inclusion of a ‘Taxpayer’s Charter’ outlines the rights and obligations of taxpayers, aiming to build trust between the tax department and citizens.
As the bill moves through the legislative process, discussions are expected to continue regarding its potential impact on taxpayers and the overall efficiency of tax administration. The balance between simplification and comprehensiveness will be crucial in determining the bill’s effectiveness in achieving its stated goals.
