Budget 2025: FM Nirmala Sitharaman may introduce new income tax bill, framework in Bu
Budget 2025: FM Nirmala Sitharaman may introduce new income tax bill, framework in Budget session
M.U.H
18/01/202520
Budget 2025: Finance Minister Nirmala Sitharaman is expected to present a bill for a new direct tax law during the upcoming budget session. The focus of this proposed legislation will be on simplifying existing provisions, eliminating redundant ones, and making the language more accessible to the general public.
The objective of this modification is to simplify the legislation, ensuring it is clear and easy to understand, and drastically cutting down its volume by approximately 60%. Finance Minister Nirmala Sitharaman during her Budget speech in July 2024 had pledging a comprehensive reassessment within six months to resolve any current intricacies and conflicts.
According to a report in PTI, a committee in charge of revising the law is considering whether the replacement for the 63-year-old Income Tax Act should be divided into two or even three parts. While the government initially planned to release the draft law for public feedback, it has now decided to take a more assertive approach amidst criticism of complex tax laws.
The bill will be introduced first, allowing for adjustments based on input from taxpayers and experts, before being finalised.
The proposed legislation will be a completely new framework, unlike a mere amendment to the current Act. “The new Income Tax law will be introduced in the Budget session of Parliament. It will be a new law and not an amendment to the existing Act. Currently, the draft law is being vetted by the law ministry and it is likely to be brought in Parliament in the second half of the Budget session," according to the PTI report citing a source.
"The government’s move to introduce a new income tax bill in the Budget session is a significant step toward simplifying tax laws and aligning them with modern economic realities. It is crucial that the process involves extensive stakeholder deliberations to address potential concerns and avoid teething troubles, ensuring a smooth transition to a more taxpayer-friendly and efficient framework," Sandeep Chilana, Managing Partner, CCLaw, told Business Today on Saturday.
According to sources, the draft law is nearing the final stages of review by the Law Ministry and is anticipated to be presented during the latter part of the Budget session, which is scheduled from January 31 to April 4.
Following the Budget announcement by Sitharaman calling for a comprehensive review of the I-T Act, 1961, the CBDT has formed an internal committee to oversee the review process. The aim is to streamline the Act, making it concise, clear, and easily understandable. This will help reduce disputes, litigation, and offer taxpayers greater tax certainty. Additionally, 22 specialised sub-committees have been established to examine various aspects of the Act.
Public feedback and suggestions have been sought in four key areas: simplifying language, reducing litigation, streamlining compliance, and identifying redundant/obsolete provisions. To date, the Income Tax Department has received 6,500 suggestions from stakeholders on the Act review.
