New Income Tax Bill 2025

The Union Cabinet, led by Prime Minister Narendra Modi, has given their nod to the New Income Tax Bill proposed by Finance Minister Nirmala Sitharaman on February 7, 2025. 

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The approval by the cabinet means that the proposed bill will now be tabled at the next Parliamentary Budget Session in front of Lok Sabha. 

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But first, let’s understand what the New Income Tax Bill has in store for Indian taxpayers.

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What is the New Income Tax Bill?

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The New Income Tax Bill is being introduced to replace the 64-year-old Income Tax Act of 1961. The finance minister expects the new bill to minimise legal disputes pertaining to taxation and simplify the rules.

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The new bill will likely eliminate the issue of complex legal terms, making it easier for the general public to understand the law. 

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The New Income Tax Bill is expected to reduce the current Income Tax Act’s length by half. New tax law reforms will reduce legal disputes and simplify the rules for the common man. 

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Why is the Income Tax Act of 1961 being replaced?

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The current Income Tax Act of 1961 was drafted many years ago and has not undergone much modification. It contains around 298 sections under 23 chapters. 

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The Act has amended and removed several outdated tax laws over the years. These outdated laws include fringe benefits tax, wealth tax, gift tax, and more.

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Despite numerous amendments, the Income Tax Act has largely remained complex and not easy for the common man to decode. 

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Expected Changes in the New Income Tax Bill

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The New Income Tax Bill is expected to make the language simpler so that the public is able to understand the rules easily. It is also expected to minimise legal disputes by simplifying the laws and regulations. 

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The lengthy interconnected sections, subsections, and provisos of the current Income Tax Act may not be comprehensible to all. It can be quite confusing and overwhelming for a common man to understand these complex terms and legislations.

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Will the New Income Tax Bill increase the tax burden?

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The main objective of introducing the New Income Tax Bill is to make it simpler for the citizens to understand the law. It is supposed to help common people comprehend the law and its provisions and further reduce court proceedings.

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The New Income Tax Bill may or may not include any new legal reforms, but there isn't much information available. The Union Budget 2025 amendments will also be part of the New Income Tax Bill.