Simplified Income Tax Bill: A New Era in Tax Legislation

The newly introduced Income Tax Bill seeks to simplify tax legislation by minimizing litigation and interpretation, reducing the word count, sections, and chapters significantly from its 1961 predecessor. Key terms have been retained to ensure tax certainty, with non-profit and salary provisions consolidated for clarity. No major policy changes or tax rate adjustments are included.

The Indian government unveiled a revised Income Tax Bill, intending to streamline tax processes by cutting down the length and complexity of the previous 1961 legislation. The updated bill, presented in the Lok Sabha, reduces the number of sections from 819 to 536 and the chapters from 47 to 23.

According to the Income Tax department, this overhaul aims to achieve tax certainty by avoiding unnecessary litigation and reinterpretations. Finance Minister Nirmala Sitharaman highlighted that significant changes were incorporated, including a reduction in word count from 5.12 lakh to 2.6 lakh.

The new bill also consolidates important tax provisions into single chapters, especially for non-profit organizations and salary-related deductions. Despite 4,000 amendments since its inception, the new draft retains crucial legal language to maintain interpretative consistency in compliance.

(With inputs from agencies.)