Government to Introduce New Income Tax Law in Parliament’s Budget Session: A Step Towards Simplification and Clarity
In a major step towards simplifying the country’s tax framework, the government is set to introduce a new Income Tax Bill during the upcoming Budget session of Parliament. The new law aims to reduce complexity, make the tax code more comprehensible, and slash the volume of the current Income Tax Act by approximately 60%.
Finance Minister Nirmala Sitharaman, during her Budget speech in July 2024, announced that the government would conduct a comprehensive review of the six-decade-old Income Tax Act, 1961, with the goal of simplifying it for taxpayers and ensuring better clarity in its provisions.
Key Changes Expected:
The new Income Tax law will not be an amendment to the existing Act but will replace it with a completely revised version. Sources indicate that the draft law is currently undergoing vetting by the law ministry and is expected to be presented in Parliament in the second half of the Budget session, which runs from January 31 to April 4, 2025.
The primary aim is to significantly reduce the number of provisions and chapters in the Act, which currently contains 298 sections and 23 chapters. In line with Sitharaman’s vision, the government is striving to cut down the volume by about 60%, focusing on making the law easier to understand and navigate.
Public Consultation and Feedback:
In an effort to make the new law more inclusive and taxpayer-friendly, the Income Tax Department solicited public input on four key areas: simplifying the language of the law, reducing litigation, cutting down on compliance burdens, and removing outdated or redundant provisions. Over 6,500 suggestions have been received from stakeholders, including businesses, professionals, and tax experts.
The government had set up an internal committee under the Central Board of Direct Taxes (CBDT) to oversee the review process. Additionally, 22 specialized sub-committees were formed to scrutinize various aspects of the Act.
Why the Change is Necessary:
The Income Tax Act, which governs the imposition of personal income tax, corporate tax, securities transaction tax, as well as gift and wealth tax, has become increasingly complex over the years. With provisions that are often difficult to interpret and navigate, the Act has led to significant legal disputes, litigation, and confusion among taxpayers.
By simplifying the law and reducing its size, the government hopes to ensure greater tax certainty, making it easier for individuals and businesses to comply with their tax obligations. The aim is to minimize the number of tax-related disputes and bring more clarity, which will ultimately foster a more efficient and transparent tax environment.
What’s Next:
The Budget session of Parliament is set to begin on January 31, 2025, with President Droupadi Murmu’s address to the joint sitting of the Lok Sabha and Rajya Sabha. Following this, the Union Budget for 2025-26 will be presented on February 1. Parliament will reconvene on March 10 and continue through April 4, during which the new Income Tax Bill is expected to be introduced and debated.
The new law is expected to significantly alter the landscape of taxation in India, providing much-needed clarity and potentially reducing the tax compliance burden on citizens and businesses alike.#IncomeTax #TaxReform
#Budget2025 #Sitharaman #TaxSimplification #IncomeTaxAct #FinanceBill #TaxLitigation #GoaNews #BudgetSession #NewsBabaTVGoa #TaxCertainty #PublicConsultation #superequity