Cabinet clears new income tax bill, to be tabled in Parliament next week

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Friday approved the new Income Tax Bill, which is set to replace the six-decade-old Income Tax Act, 1961, sources said. The bill aims to simplify the direct tax laws without imposing any additional tax burden on taxpayers. According to sources, the new legislation eliminates complex clauses, explanations, and long sentences to ensure clarity and ease of understanding. The bill will now be introduced in Parliament next week and subsequently referred to the Parliamentary Standing Committee on Finance for further examination.
As per information, the first phase of the ongoing Budget Session concludes on February 13, while the session will reconvene on March 10 and continue until April 4. Union Finance Minister Nirmala Sitharaman had earlier announced in the Union Budget 2025-26 that the new tax bill would be tabled in the current session of Parliament. This follows her initial proposal in the July 2024 Budget for a comprehensive review of the Income-tax Act, 1961. According to information, The Central Board of Direct Taxes (CBDT) had formed an internal committee to oversee the review process, aiming to make the law more concise, reduce disputes and litigation, and enhance tax certainty. Additionally, 22 specialized sub-committees were constituted to assess various aspects of the existing tax framework.
To incorporate diverse perspectives, the Income Tax Department had invited public input under four key categories: simplification of language, reduction of litigation, easing compliance, and eliminating redundant or obsolete provisions. The department received approximately 6,500 suggestions from various stakeholders during the consultation process. The new Income Tax Bill marks a significant step towards modernizing India’s tax laws, ensuring greater transparency and efficiency while fostering a taxpayer-friendly ecosystem. The proposed changes are expected to streamline tax administration, minimize ambiguities, and facilitate better compliance across the board, noted experts.

(Business Correspondent)