- Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025 in Lok Sabha, despite opposition from rival parties.
- The bill will not alter tax slabs or rebates but aims to simplify the 64-year-old Income Tax Act, 1961.
- Expected to take effect from April 1, 2026, the bill will make tax laws more transparent and reduce legal disputes.
Why is a New Income Tax Bill Needed?
The existing Income Tax Act, 1961, has undergone multiple amendments over the years, making it complex and difficult to interpret. The government wants to modernize tax laws by simplifying the language and removing outdated clauses. Instead of modifying tax rates, the focus is on making tax rules easier to understand and comply with.
The new bill is 622 pages long with 536 clauses, replacing the older 823-page legislation that had 819 sections. Changes include replacing technical terms like ‘assessment year’ with ‘tax year’ to make the law more user-friendly. By reducing ambiguity, the government hopes to minimize tax-related legal battles and encourage voluntary tax payments.
What’s Next for the Bill?
Now that the bill has been introduced, it will be reviewed by the Parliamentary Standing Committee on Finance before final approval. If passed, it will mark a major milestone in India’s tax reform journey. While there are no immediate changes in tax rates, taxpayers can expect a more streamlined and transparent tax system in the coming years.
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