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4 min read | Updated on February 13, 2025, 18:20 IST
SUMMARY
The Income Tax Bill, 2025, reduces the size and complexity of the Income Tax Act, 1961, cutting the word count, sections, and chapters while increasing clarity through tables and formulae.
Union Finance Minister Nirmala Sitharaman speaks in the Rajya Sabha during the Budget session of Parliament, in New Delhi, Thursday, Feb. 13, 2025.
Union Finance Minister Nirmala Sitharaman on Thursday introduced the Income Tax Bill, 2025, in the Lok Sabha, in a major step towards overhauling India’s tax laws. She urged Speaker Om Birla to refer the draft legislation to a select committee of the House for further scrutiny and recommendations.
The finance ministry stated that the proposed legislation is designed to simplify the existing tax framework, minimise ambiguities, and reduce litigation. According to the ministry, the draft law adheres to three core principles: ensuring clarity through textual and structural simplifications, maintaining continuity by avoiding major tax policy changes, and preserving predictability by keeping tax rates unchanged.
The finance ministry said that the new bill reduces the complexity of tax laws by eliminating intricate language, removing redundant provisions, and reorganising sections for ease of reference. It is structured to enhance readability and navigation for taxpayers and professionals alike.
The bill significantly cuts down the length and complexity of the Income Tax Act, 1961:
Item | Existing Income-tax Act, 1961 | Proposed Income-tax Bill, 2025 | Change (Reduction/Addition) |
---|---|---|---|
Words | 512,535 | 259,676 | Reduction: 252,859 words |
Chapters | 47 | 23 | Reduction: 24 chapters |
Sections | 819 | 536 | Reduction: 283 sections |
Tables | 18 | 57 | Addition: 39 tables |
Formulae | 6 | 46 | Addition: 40 formulae |
After introducing the bill, Sitharaman requested that the Speaker refer the draft law to a select committee of the House. The committee is expected to review the bill and submit its report by March 10.
Once the select committee presents its findings, the bill will return to the Cabinet for approval before being reintroduced in Parliament for debate and passage. The Speaker will determine the composition and operational rules of the select committee in the coming days.
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