Blitz Bureau
NEW DELHI: The new Income Tax Bill will be taken up for discussion in the Monsoon session of Parliament, Finance Minister Nirmala Sitharaman told the Lok Sabha on March 25. The Income-tax Bill, 2025, which will replace the six-decade old Income Tax Act, 1961, will make direct tax laws simple to understand, remove ambiguities, and reduce tax disputes.
The simplification exercise was guided by three core principles which include textual and structural simplification for improved clarity and coherence, ensuring continuity and certainty with no major tax policy changes and no modifications of tax rates to preserve predictability for taxpayers, the Finance Ministry said.
The Bill, based on global best practices, aims to enhance the ease of doing business by providing a tax framework that is simple and clear. It has led to a substantial reduction in the Act’s volume, making it more streamlined and navigable. The total number of words in the new Income Tax Bill has been reduced to 259,676 from a massive 512,535 words in the existing Income Tax Act. This close to 50 per cent cut has resulted in a reduction of 252,859 words, according to an official statement.
Accordingly, the number of chapters in the new Income Tax Bill has come down to 23 from 47 in the existing Income Tax Act. Similarly, the number of sections has been cut to 536 from 819 earlier which has resulted in removing as many as 283 sections, the statement explained.
This massive reduction has taken place with the simplification of language, making the law more accessible while the consolidation of amendments has reduced fragmentation.
A three-pronged approach was adopted with a focus on eliminating intricate language to enhance readability, removing redundant and repetitive provisions for better navigation and reorganizing sections logically to facilitate ease of reference, according to the statement.
There has also been a structural rationalisation through tables and formulae for improved readability. Besides, the preservation of existing taxation principles has ensured continuity while enhancing usability, the statement said.
Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices.
The government also 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.
