On February 7, 2025, the Union Cabinet, led by Prime Minister Narendra Modi, approved a new Income Tax Bill that will replace the old Income Tax Act, which has been in effect for over 60 years.
The new bill aims to simplify the tax process by removing outdated amendments and sections that are no longer relevant.
Key Changes and Simplification
The primary goal of the new bill is to make the tax process easier for everyone.
The language used will be more straightforward, helping people understand it without the need for expert assistance.
By eliminating complicated provisions, the bill is expected to reduce legal disputes and handle tax-related issues more efficiently.
Introduction in Parliament
Following Cabinet approval, the bill will be introduced in Parliament next week. After its introduction, it will be sent to the Standing Committee on Finance for review.
The first phase of the current Parliament session ends on February 13, with the session resuming on March 10 and continuing until April 4.
Reasons Behind the New Bill
The existing Income Tax Law, introduced in 1961, has been amended many times over the years.
However, due to societal, business, and technological changes, the law no longer fits the current landscape.
The new bill aims to modernize the tax system and better align it with today’s economy.
No Changes in Tax Slabs
While the new bill focuses on simplifying tax compliance, it will not alter the existing tax slabs. Any changes to tax slabs are typically made through the Finance Act.
It is worth noting that a previous attempt to reform the tax system, the ‘Direct Tax Code Bill, 2010,’ was introduced but later repealed after the government changed in 2014.
