NEW DELHI, Jan 18: In the upcoming Budget session of Parliament, the Government is expected to present a new income tax bill aimed at simplifying the existing tax laws, enhancing clarity, and reducing the total length of the documents by around 60%.
During her Budget announcement in July, Finance Minister Nirmala Sitharaman stated a comprehensive review of the six-decade-old Income Tax Act of 1961 would be completed within six months.
According to sources, “The new Income Tax law will be brought forth in the Budget session of Parliament. It will be a new piece of legislation rather than an amendment to the current Act. The draft legislation is currently undergoing review by the law ministry and is expected to be introduced in the latter half of the Budget session.”
The Budget session will run from January 31 to April 4, with the first part (January 31-February 13) commencing with President Droupadi Murmu’s address to both Lok Sabha and Rajya Sabha, followed by the presentation of the Economic Survey for 2024-25. The Union Budget for 2025-26 is scheduled for release on February 1.
Parliament will reconvene on March 10 and continue its sessions until April 4.
Following Sitharaman’s announcement for a thorough review of the Income Tax Act, the CBDT established an internal committee tasked with condensing and clarifying the Act to minimize disputes, litigation, and enhance tax certainty for taxpayers. Moreover, there are 22 specialized sub-committees set up to examine different aspects of the Act.
Feedback and suggestions from the public have been sought in four key areas: simplifying language, reducing litigation, lowering compliance requirements, and eliminating redundant or outdated provisions.
The Income Tax Department has received approximately 6,500 recommendations from stakeholders regarding the review of the Act.
Sources indicate that many provisions and chapters will be significantly reduced, with obsolete sections slated for removal.
Presently, the Income Tax Act of 1961 governs direct taxes, including personal income tax, corporate tax, securities transaction tax, as well as gift and wealth tax, totaling around 298 sections and 23 chapters.
The goal is to decrease this volume by about 60%,” a source explained.
In her Budget speech in July 2024, Sitharaman highlighted that the review’s aim is to create a concise and easily comprehensible Act.
This endeavor aims to reduce disputes and litigation, thereby providing tax certainty. Additionally, it is designed to lessen the number of claims entangled in legal challenges. The proposed timeline for completion is set at six months, she mentioned. (Agencies)
