New Income Tax Bill: The government may introduce a new Income Tax Bill in this budget session. Its aim is to simplify the income tax laws. Currently, the Law Ministry is considering the draft.
New Income Tax Bill: The government is likely to introduce a new Income Tax Bill in the upcoming Budget session of Parliament, aimed at simplifying the current income tax law, making it understandable and reducing the number of pages by about 60 per cent. Finance Minister Nirmala Sitharaman had announced a comprehensive review of the six-decade-old Income Tax Act, 1961, within six months in the July Budget. “The new Income Tax Act will be introduced in the Budget session of Parliament. It will be a new law and not an amendment to the existing law,” a source said.
The Law Ministry is considering the draft law
Currently, the draft law is being considered by the Law Ministry and it may be introduced in Parliament in the second part of the Budget Session.” The Budget session will run from January 31 to April 4. The first part (January 31-February 13) will begin with President Draupadi Murmu’s address to a joint session of the Lok Sabha and the Rajya Sabha, followed by the presentation of the Economic Survey for 2024-25. The Union Budget for the financial year 2025-26 will be presented on February 1. Parliament will resume on March 10 and will meet till April 4.
An internal committee was formed
Following the budget announcement by Sitharaman for a comprehensive review of the Income Tax Act, 1961, the CBDT had set up an internal committee to oversee the review and make the Act concise, clear and easy to understand. This will reduce disputes, litigation and provide greater tax certainty to taxpayers. In addition, 22 special sub-committees have been set up to review various aspects of the Act. Suggestions and inputs were invited from the public in four categories – simplification of language, reduction of litigation, non-compliance, and redundant/obsolete provisions.
Currently there are 298 sections and 23 chapters
The Income Tax Department has received 6,500 suggestions from stakeholders for the review of the Act. Sources said that there will be a significant reduction in provisions and chapters and obsolete provisions will be removed. The Income Tax Act, 1961, which deals with the imposition of gift and wealth tax besides direct taxes such as personal income tax, corporate tax, securities transaction tax, currently has about 298 sections and 23 chapters. The source said, “The effort is to reduce the amount of tax by about 60 percent.” Sitharaman had said in her budget speech of July 2024 that the aim of the review is to make the Act concise, clear, easy to read and understand. She had said that this would reduce disputes and litigation, giving tax certainty to taxpayers. This will also reduce the demand entangled in litigation. It is proposed to complete it in six months.
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