On February 7, 2025, the Union Cabinet approved the new Income Tax Bill, which will replace the existing Income Tax Act that has been in place for over six decades.
The new bill aims to simplify the tax process by removing outdated amendments and sections.
Additionally, the language used in the bill will be more accessible, allowing people to understand it without needing the help of a tax expert.
By eliminating complicated provisions and clarifications, the new bill is expected to reduce litigation and resolve disputed tax demands more effectively.
Introduction in Parliament
After being approved by the Cabinet, which is chaired by Prime Minister Narendra Modi, the new bill will be introduced in Parliament next week.
Following its introduction, it will be sent to the Standing Committee on Finance. The first phase of the current Parliament session is set to end on February 13, with the session resuming on March 10 and continuing until April 4.
Reasons for the New Bill
The Income Tax Law, originally enacted in 1961, has undergone numerous amendments over the years. However, due to changes in society, business practices, and technology, there is a pressing need to overhaul the old law.
The new bill addresses these changes and seeks to modernize the Income Tax system to better reflect the current socio-economic landscape.
No Change in Tax Slabs
While the new bill aims to simplify tax compliance, it will not change the existing tax slabs. Changes to tax slabs are usually made through the Finance Act.
For context, a previous attempt to introduce a comprehensive tax reform, the ‘Direct Tax Code Bill, 2010’, was introduced in Parliament but later repealed after the government changed in 2014.