Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025, in the Lok Sabha on Thursday. The bill is part of tax reforms aimed at simplifying and streamlining tax laws. It seeks to make provisions clearer and reduce legal disputes.
The new bill will replace the 1961 Income Tax Act, which has grown complicated over the years due to multiple revisions. The legislation will now be reviewed by a Select Committee before it gets final approval. If passed, it will take effect on April 1, 2026.
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The primary goal of the bill is to simplify the tax code, making it easier to understand and more transparent. By replacing complex provisions with simpler ones, it aims to encourage voluntary tax compliance and reduce legal conflicts.
The bill also proposes lower penalties for certain offenses, creating a more taxpayer-friendly system. It condenses the law from 823 pages to 622 pages, with 536 clauses instead of 819 sections. Key changes include replacing terms like ‘assessment year’ with ‘tax year’ to simplify language and eliminate outdated provisions.
However, the bill will not alter current tax slabs or rebates. Instead, it focuses on making the law more accessible and understandable.
Rohinton Sidhwa, Partner at Deloitte India, called the reform a major step towards modernizing India’s tax framework, promising clarity and efficiency. He added that the bill would help build trust in the tax system.
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