Image Source : PTI/FILE PHOTO Union Minister for Finance and Corporate Affairs Nirmala Sitharaman chairs the eighth pre-Budget consultation with the stakeholders and representatives from the trade unions for the Union Budget 2025-26.
The government will introduce a new income tax bill in the upcoming Parliament budget in a major move to simplify India’s tax system, it was quoted as saying by news agency PTI. The proposed legislation aims to replace the six-decade-old Income Tax Act, 1961, with a concise, lucid, and comprehensible version, reducing the number of provisions by about 60 per cent.
Finance Minister Nirmala Sitharaman had announced a comprehensive review of the Income Tax Act in her July 2024 budget speech and promised to revamp the law in six months. Sources said the draft law is currently being reviewed by the Ministry of Law and is expected to be tabled in Parliament during the second half of the budget session.
Key details of the Budget Session
The Budget session will begin on January 31, 2025, and end on January 4, 2025. The joint session of Parliament will begin with an address by President Draupadi Murmu, followed by the presentation of the Economic Survey for 2024-25. The Union Budget for 2025-26 will be presented on February 1, 2025.
Goals of the new Income Tax Bill
The new law requires:
Simplify the language and provisions of the current Income Tax Act.
Reduce litigation and disputes by increasing clarity and acceptance by taxpayers.
Elimination of obsolete provisions and modernisation of tax administration.
Reduce the number of chapters and parts to simplify compliance.
Review process and public input
To achieve these goals, the Central Board of Direct Taxes (CBDT) had formed an internal committee and 22 specialised sub-committees to review various aspects of the Act. The Income Tax Department received over 6,500 suggestions from stakeholders, focusing on language simplification, compliance reduction, litigation minimisation, and removing redundant provisions.
The existing Income Tax Act, 1961, contains 298 sections across 23 chapters and addresses various direct taxes, including personal income tax, corporate tax, and securities transaction tax. The new draft aims to reduce the Act’s size by approximately 60 per cent.
Expected impact
Once implemented, the new law will make tax compliance easier, reduce administrative burden, and foster a more taxpayer-friendly environment. Finance Minister Sitharaman stated that the revised law would lower disputes, expedite resolution, and provide much-needed tax certainty for individuals and businesses.
Also read | DDA launches affordable flats in Delhi starting at Rs 8 lakh: Check eligibility, registration details
