In a historic move, the government is set to introduce a new Income Tax Bill in Parliament, replacing the six-decade-old Income Tax Act of 1961. The new bill aims to simplify tax laws, reduce legal ambiguities, and encourage voluntary compliance. Finance Ministry officials have stated that this legislation is designed to modernize India’s taxation system and align it with global best practices.
“The current Income Tax Act, which has been in force since 1961, has undergone multiple amendments over the decades, making it increasingly complex and difficult to navigate. Finance Minister Nirmala Sitaraman highlighted that the new bill will simplify the tax code by consolidating provisions, eliminating redundant clauses, and reducing legal disputes.”
“The Indian tax system needs to be easier to understand and follow. The new Income Tax Bill will bring clarity, reduce litigation, and facilitate a more efficient compliance system,” said a senior government official.
The bill proposes to condense the existing law from over 800 pages to 622 pages. Tax slabs and exemptions will be presented in clear tables, making them easier for taxpayers to understand.
By clarifying key provisions and removing ambiguities, the new law aims to reduce the number of tax-related litigations. As of March 2024, tax disputes amounted to ₹13.4 trillion. The bill seeks to minimize these through clearer definitions and streamlined dispute resolution mechanisms.
The government believes that a transparent and user-friendly tax code will encourage more people to pay taxes voluntarily. The bill also introduces measures to curb tax evasion through stricter compliance norms.
“The bill supports further digitization of tax processes, reducing paperwork and making tax filing more seamless for individuals and businesses. An AI-driven assessment system is also being proposed to reduce human intervention in tax scrutiny. The simplified structure will make it easier for individuals and businesses to comprehend their tax obligations without professional assistance.”
Taxpayers will spend less time dealing with complex regulations and paperwork. With clearer provisions, taxpayers are less likely to face litigation, saving time and resources. Simplified tax rules will encourage entrepreneurship and foreign investment by making India’s tax regime more competitive internationally.
While the government is confident about the benefits of the new bill, opposition parties and tax experts have raised some concerns. Critics argue that the bill may not go far enough in reducing tax rates for the middle class and small businesses.
“The bill is a step in the right direction, but we need to ensure that tax rates remain fair and do not overburden the salaried class. The New finance act simplifies the tax law and legal complexities by rewording and streamlining various provisions for clearer understanding and also by clarifying complex provision and removing redundant clauses number of legal disputes resolved. Further the new law design to encourage foster a culture of voluntary tax compliance among tax payers. This overhaul aims to make India’s tax system more transparent, user-friendly, and aligned with modern financial practices, enhancing ease of doing business and compliance,” said a leading Chartered Accountant Ankur Bansal.
The bill is expected to be tabled in Parliament during the upcoming budget session. If passed, it will mark one of the most significant tax reforms in India’s history. Taxpayers and businesses across the country will be watching closely to see how the new law will impact their financial planning and compliance requirements.