Revamping India's Tax Laws: New Bill Set to Simplify Decades-Old Act

The Union Cabinet approved a new income tax bill to replace the 60-year-old Act, aimed at simplifying direct tax laws without adding burdens. The bill, soon to be introduced in Parliament, will focus on simplicity and clarity, reducing disputes and litigations.

The Union Cabinet has approved a groundbreaking new income tax bill designed to replace the six-decade-old Income Tax Act, signaling a major shift in India's fiscal landscape, sources confirmed on Friday. The bill aims to simplify and clarify the existing law without imposing any additional tax burdens on citizens.

This legislative move, led by Prime Minister Narendra Modi, will see the introduction of the new bill in Parliament next week. It will subsequently be reviewed by Parliament's Standing Committee on Finance. As part of the current budget session, the bill is slated for discussion before the session's initial phase concludes on February 13, with the reconvening set for March 10 through April 4.

Announced by Finance Minister Nirmala Sitharaman during the Budget 2025-26 unveiling, this overhaul follows her initial call in July 2024 for a comprehensive review of the 1961 Income-tax Act. To this end, the Central Board of Direct Taxes (CBDT) established a committee and 22 sub-committees to streamline and clarify the Act. Public feedback was actively sought, resulting in 6,500 suggestions across categories like language simplification and litigation reduction.

(With inputs from agencies.)