The Union Cabinet chaired by Prime Minister Modi, is expected to greenlight the new income tax bill during its meeting on Friday. According to an India Today report, the bill will be introduced in Lok Sabha on Monday. The bill is part of a broader effort to reform the taxation system. While presenting the Union Budget on February 1, the government announced its intention to introduce a new Direct Tax Code. The bill is expected to be referred to the Standing Committee for further discussion and refinement of its provisions.
The new legislation, often referred to as the Direct Tax Code, is aimed at overhauling the existing tax structure, making it more streamlined and transparent.
Why Is New Income Tax Bill?
The new legislation, also known as the Direct Tax Code, is aimed at overhauling the existing income tax structure to simplify the provisions. Finance Minister Nirmala Sitharaman said that the bill would embody the same philosophy of Nyaya that was at the heart of Bharatiya Nyaya Sanhita. The law had repealed the Indian Penal Code of 1860 from July 2024. Direct Tax Code will replace the existing Income Tax Act, 1961.
In the Budget Speech 2025, Sitharaman said: “I am happy to inform this August House and the country that the new income-tax bill will carry forward the same spirit of “Nyaya”. The new bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation.”
Key Factors Of The New Income Tax Bill
- The bill will not introduce any new taxes but will focus on simplifying tax laws, removing ambiguities
- Expected to make the compliance of the income tax law easier for taxpayers and income tax authorities
- It Could give more clarity to determine the residential status of a taxpayer
- Simplification of legal language, ensure that even ordinary taxpayers can easily understand tax provisions and their implications
- Several amendments are expected to be introduced to the existing law, with a focus on reducing litigation
- One of the changes might involve lowering penalties for certain offenses, making the tax system more forgiving and easier on taxpayers
