Government of India has introduced the Income-Tax Bill, 2025, in Parliament on February 13, 2025, to simplify the Income-tax Act, 1961. This initiative focuses on improving clarity, maintaining tax policy continuity, and preserving existing tax rates. The simplification process involved eliminating complex language, removing redundant provisions, and restructuring sections for better readability. The Government engaged extensively with stakeholders, considering 20,976 suggestions, and studied tax models from Australia and the UK. The revised law significantly reduces the Act’s size, cutting 252,859 words, 24 chapters, and 283 sections while adding more structured tables and formulae. These changes aim to enhance ease of understanding without altering taxation principles, ensuring consistency for taxpayers and businesses.
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 13th February, 2025
Press Release
Executive Summary on the Comprehensive Simplification of the Income-tax Act, 1961
Introduction
The Income-Tax Bill, 2025 has been tabled in Parliament on 13th February 2025, marking a significant step toward simplifying the language and structure of the Income-tax Act, 1961.
The simplification exercise was guided by three core principles:
1. Textual and structural simplification for improved clarity and coherence.
2. No major tax policy changes to ensure continuity and certainty.
3. No modifications of tax rates, preserving predictability for taxpayers.
A three-pronged approach was adopted:
- Eliminating intricate language to enhance readability.
- Removing redundant and repetitive provisions for better navigation.
- Reorganizing sections logically to facilitate ease of reference.
Consultative and Research-Based Approach
The Government ensured widespread stakeholder engagement, consulting taxpayers, businesses, industry associations, and professional bodies. Out of 20,976 online suggestions received, relevant suggestions were examined and incorporated, where feasible. Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices.
Outcomes of the Simplification Exercise
Quantitative Impact
The review has led to a substantial reduction in the Act’s volume, making it more streamlined and navigable. Key reductions are summarized below:
| Item | Existing Income-tax Act, 1961 | Proposed in the Income-tax Bill, 2025 |
Change (Reduction/Addition) |
| Words | 512,535 | 259,676 | Reduction: 252,859 words |
| Chapters | 47 | 23 | Reduction: 24 chapters |
| Sections | 819 | 536 | Reduction: 283 sections |
| Tables | 18 | 57 | Addition: 39 tables |
| Formulae | 6 | 46 | Addition: 40 formulae |
Qualitative Improvements
- Simplified language, making the law more accessible.
- Consolidation of amendments, reducing fragmentation.
- Removal of obsolete and redundant provisions for greater clarity.
- Structural rationalization through tables and formulae for improved readability.
- Preservation of existing taxation principles, ensuring continuity while enhancing usability.
The Income-tax Bill, 2025 reflects the Government’s commitment to enhancing ease of doing business by providing a tax framework that is simple and clear,
(V. Rajitha)
Commissioner of Income Tax
(Media & Technical Policy) &
Official Spokesperson, CBDT
Also Read:
Govt released Income-Tax Bill, 2025 (Download)
New Income Tax Bill 2025: General FAQs and Broad Scope
