What is new Income Tax Bill announced by Finance Minister Nirmala Sitharaman and why it will replace the Income Tax Act Soon, the FM will likely table the same in the Parliament. The new income tax bill, once passed by the Parliament, will replace the decades-old Income Tax Act of 1961. Read on to know what the new income tax bill is and how it is being introduced
New Income Tax Bill: The new income tax bill is likely to be tabled in the Parliament this week. The new income tax bill has been cleared by the Union Cabinet on February 7, 2025. Finance Minister Nirmala Sitharaman announced in Budget 2025 that she will table the new income tax bill in the Parliament. According to media reports, the new income tax bill will likely be sent to the Standing Committee on Finance once it is tabled in the Parliament.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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What is new income tax bill?
The new income tax bill will replace the current Income Tax Act, 1961, once it is passed by the Parliament and the effective date of implementation for the same is announced.Union Finance Secretary Tuhin Kanta Pandey has confirmed in media interaction that the new income tax bill will feature concise sentences without provisos and explanations, whilst maintaining tax neutrality.
The new income tax bill has come after Finance Minister Nirmala Sitharaman announced the review of the Income Tax Act, 1961, in Budget 2024 July. The review was announced to make the direct tax laws straightforward, clear and easily understandable. She further emphasised that the review of the Income Tax Act will be completed in six months.
Also Read | What new income tax bill could mean for taxpayers
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To ensure the active participation of the stakeholders, the Central Board of Direct Taxes (CBDT) announced the formation of the internal committee. The stakeholders, such as taxpayers, tax experts, and common citizens, were invited to share their suggestions on the existing Income Tax Act in four categories, namely - simplification of language, litigation reduction, compliance reduction and deletion of redundant and obsolete provisions.
A dedicated webpage was launched on the income tax e-filing website from October 6, 2024.
Why new income tax bill is being introduced
The new income tax bill is being introduced to simplify the income tax laws, eliminate uncertainties and minimise legal disputes. Finance Minister Nirmala Sitharaman said that the new income tax bill would reduce legal disputes and provide tax clarity to taxpayers, whilst lowering disputed demands.According to a PTI report, the new Income Tax law aims to be more accessible and simplified, enabling ordinary citizens to understand it. The government intends to reduce its length by half and simplify the language. This will allow taxpayers to clearly understand their income tax obligations. This streamlined approach should result in fewer legal disputes and reduced contested tax demands as opposed to current income tax laws, which lead to litigation.
There is a need to modernise the current Income Tax Act to reflect the significant societal changes relating to personal income generations and business operations. While amendments have been made to keep up with the changes in the economy and society, the existing tax laws have become mammoth due to numerous amendments over six decades. The current legislation's complexity, with its interconnected sections, sub-sections and provisos, makes it challenging for ordinary citizens to understand.
How new income tax bill will make direct tax laws smaller & simplified?
The current Income Tax Act contains 298 sections across 23 chapters. The current income tax laws govern personal income tax laws, corporate taxes, securities transaction tax and gift tax. As the buzz suggests, it is expected the new income bill will cut the income tax laws significantly which may even be cut by half.The new legislation will exclude irrelevant amendments and sections, featuring clear language that the public can understand without professional tax consultation.
To keep up with the global best practices, several amendments have been made to the six-decades-old Income Tax Act. Further, several taxes have been eliminated over time, such as the elimination of wealth tax, etc.
The introduction of the new tax regime from FY 2020-21, sans deductions and exemptions, has further expanded the scope of the income tax laws.
Will new Income Tax Bill mean a higher tax burden for taxpayers?
The new income tax bill is being brought to simplify the language, reduce litigations and make compliance easier and more straightforward. Hence, it is likely that the new income tax bill will be revenue-neutral and will alter any tax slabs and rates. This was further clarified by the Finance Secretary in the media interactions, post Budget 2025.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
