The new Income Tax Bill, approved by the Union Cabinet on Friday, is set to replace the current Income Tax Act, 1961, according to government sources cited by news agency PTI. The main objective of the bill is to streamline and modernise India's tax system by simplifying legal language to ensure that taxpayers can easily comprehend the provisions.
Finance secretary has reaffirmed that the bill will not entail any new taxes but will instead concentrate on simplifying tax laws, reducing legal complexities, and facilitating compliance for taxpayers. The new bill will incorporate concise sentences, provisions, and explanations, striving to be 50% shorter than the existing law in order to decrease litigation.
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Additionally, the bill may introduce reduced penalties for specific offenses with the ultimate goal of making the tax system more user-friendly for taxpayers.
The proposed New Income Tax Bill 2025 is expected to introduce a notable change by enabling prompt income tax reliefs, eliminating the need to wait for budget updates or amendments to the Income Tax Act. There are also discussions around including provisions that would authorize the government to adjust deduction and rebate limits through executive orders.