The Indian government is set to introduce the new Income Tax Bill, 2025, in the Lok Sabha on February 13, 2025. This comprehensive 622-page legislation comprises 536 clauses, organized into 23 chapters and 16 schedules. The bill aims to simplify the existing Income Tax Act of 1961, making it more concise and easier to understand. The Union Cabinet approved the bill on February 7, 2025, and it is expected to be referred to the Parliament’s Standing Committee on Finance for further deliberation.
Finance Minister Nirmala Sitharaman had announced a comprehensive review of the six-decade-old Income Tax Act in her July 2024 budget speech, with the goal of reducing disputes and litigation, thereby providing greater tax certainty to taxpayers. Following this, the Central Board of Direct Taxes (CBDT) established an internal committee and 22 specialized sub-committees to review various aspects of the Act. Public inputs were invited in categories such as simplification of language, litigation reduction, compliance reduction, and removal of redundant provisions, resulting in over 6,500 suggestions from stakeholders.
The new bill seeks to reduce the volume of the existing law by about 60%, eliminating obsolete provisions and making the direct tax law simpler to understand without imposing any new tax burdens. It avoids the use of provisos, explanations, or long sentences, aiming for clarity and ease of comprehension.
The Budget session of Parliament is scheduled from January 31 to April 4, 2025, with a recess between February 13 and March 9. The first half includes the President’s address to the joint sitting of both houses and the presentation of the Economic Survey for 2024-25, followed by the Union Budget for 2025-26 on February 1. The introduction of the new Income Tax Bill is anticipated in the second half of the session, commencing on March 10.
This legislative move represents a significant step towards modernizing India’s tax framework, aiming to make it more transparent and taxpayer-friendly.
