There’s major news for taxpayers! The Union Cabinet, led by Prime Minister Narendra Modi, has approved a new Income Tax Bill, set to replace the existing six-decade-old IT Act. This move aims to simplify tax laws, making them easier to understand and reducing legal disputes.
Key Highlights of the New Income Tax Bill
The new bill, approved on Friday, February 7, 2025, will eliminate outdated amendments and complex legal jargon. The objective is to create a more transparent tax system where individuals can comprehend tax regulations without needing expert guidance. Additionally, by removing unnecessary provisions, the government aims to minimize litigation and reduce disputed tax demands.
Next Steps: When Will It Be Implemented?
The bill will be presented in Parliament next week and later sent to the Standing Committee on Finance for further review. The first phase of the ongoing budget session ends on February 13, while the second phase will resume on March 10 and continue until April 4.
Why Is a New Income Tax Bill Needed?
The current Income Tax Act (1961) was introduced nearly 60 years ago. Since then, significant changes have occurred in how people earn money and how businesses operate. While numerous amendments have been made over the years, rapid technological and economic advancements have made a complete overhaul necessary. The new bill seeks to modernize tax laws to align with India’s evolving financial landscape.
Will Income Tax Slabs Change?
The primary aim of the bill is to simplify tax compliance and improve clarity, not alter tax slabs. Changes to income tax rates and slabs typically occur through the Finance Act, rather than through structural tax law revisions.
This is not the first attempt at reform. In 2010, the Direct Tax Code Bill was introduced in Parliament but was eventually scrapped after the government changed in 2014. The newly proposed bill represents another step toward a streamlined and efficient tax system.
Stay tuned for further updates as the bill progresses through Parliament!
