income tax
The government is likely to introduce a new Income Tax Bill in the upcoming budget session of Parliament, which aims to simplify the current Income Tax law, make it understandable and reduce the number of pages by about 60 percent. Finance Minister Nirmala Sitharaman had announced in the July Budget a comprehensive review of the six-decade-old Income Tax Act, 1961, within six months. A source said, “The new income tax law will be introduced in the budget session of Parliament. This will be a new law, not an amendment to the existing law.
Law Ministry is considering the draft law
“At present, the draft law is being considered by the Law Ministry and may be introduced in Parliament in the second half of the budget session.” The budget session will run from January 31 to April 4. The first part (31 January-13 February) will begin with President Draupadi Murmu addressing the joint session of the Lok Sabha and the Rajya Sabha, followed by the presentation of the Economic Survey for 2024-25. The Union Budget for the financial year 2025-26 will be presented on February 1. Parliament will reconvene on March 10 and run till April 4.
Internal committee was formed
Following the budget announcement by Sitharaman, CBDT had constituted an internal committee to oversee the review and make the Act concise, clear and easy to understand for a comprehensive review of the Income Tax Act, 1961. This will reduce disputes, litigation and provide greater tax certainty to taxpayers. In addition, 22 special sub-committees have been set up to review various aspects of the Act. Suggestions and information were invited from the public in four categories – simplification of language, reduction in litigation, lack of compliance, and unnecessary/obsolete provisions.
Currently there are 298 sections and 23 chapters
The Income Tax Department has received 6,500 suggestions from stakeholders to review the Act. Sources said that there will be a significant reduction in the provisions and chapters and obsolete provisions will be removed. The Income Tax Act, 1961 currently has about 298 sections and 23 chapters dealing with the imposition of gift and wealth tax in addition to direct taxes like personal income tax, corporate tax, securities transaction tax. “The effort is to reduce the tax quantum by about 60 per cent,” the source said. Sitharaman had said in her budget speech of July 2024 that the objective of the review is to make the Act concise, clear, easy to read and understand. He had said that this would reduce disputes and litigation, thereby providing tax certainty to taxpayers. This will also reduce the demand entangled in litigation. It is proposed to complete it in six months.
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