Union Cabinet Approves New Income-Tax Bill; Aiming For Simplification And Clarity

The Union Cabinet approved a new income-tax Bill on Friday, which is expected to be presented in Parliament next week. According to government officials, the Bill seeks to simplify the tax code by reducing the number of sections by nearly a third.

A government official explained that the new Bill aims to reduce sections by 25 to 30 percent, making the law more concise and accessible. “We have removed provisos and explanations, halving the word count,” the official said. The goal is to make the legislation simpler and easier for the public to understand.

Addressing concerns about power delegation, the official assured that authorities have not been granted excessive power. “There is no excessive delegation. The substantive power related to income quantification and tax rates remains with Parliament.

Every single rupee must be collected only after Parliamentary approval, which is the fundamental principle of taxation,” the official added. However, some procedural details have been shifted to rules to make provisions more compact.

Focus On Simplicity, Clarity, And Stakeholder Consultation

A second official highlighted that the primary goal of the Bill is to simplify tax laws and ensure clarity. “We have used lucid language, active voice, and shorter sentences, while eliminating redundancy and complex explanations,” they explained.

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The tax department plans to subject the Bill to public consultation to ensure transparency and gather feedback from taxpayers, businesses, and experts. “Consulting stakeholders will reduce the chances of ambiguities or legal disputes in the future, ensuring a smoother transition to the new tax regime,” the first official added.

Finance Minister Nirmala Sitharaman confirmed in an interview following the Budget that the Bill would be referred to the Standing Committee on Finance after being tabled in Parliament. This committee will initiate a consultation process for further review.

Collaboration In Drafting The Bill

Over 100 officers contributed to drafting the new Bill, bringing in a wealth of experience from tax administration. The effort to simplify tax laws was described as a “Herculean task,” but officials are optimistic about the Bill’s potential to bring real change. “If this Bill achieves true simplification within such a short timeframe, the credit goes to the government,” one official remarked. The drafting was completed in just six months, with a strong political push.

According to officials, many officers from outside Delhi were relocated to the capital specifically for this project. They worked long hours, including late nights, to meet the demanding timeline for completion.

Improving Compliance And Reducing Ambiguities

Akhilesh Ranjan, former member of the Central Board of Direct Taxes (CBDT) and adviser at PwC, commented on the expected improvements in the new Bill. “The Bill will likely combine sections addressing the same issues, avoid cross-referencing, and provide definitions within each chapter. This approach should make the law more comprehensible and easier to comply with,” Ranjan stated.

The new income-tax Bill promises to reshape the country’s tax landscape, making it simpler and more efficient. The public consultation process and the expected review by the Standing Committee will ensure further refinement before its final approval.