Introduction & Purpose:
- Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in Lok Sabha.
- Aims to simplify the existing Income Tax Act, 1961, which has been amended over 4,000 times since 1962.
Relevance : GS 2(Governance )
Legislative Process:
- The Bill will be referred to a Parliamentary Select Committee for review.
Key Structural Changes:
- Word count reduction: From 5.1 lakh words to nearly half.
- Chapters reduced: From 47 to 23 for easier comprehension.
Terminology Simplification:
- “Tax Year” introduced to replace multiple terms like “assessment year” and “previous year.”
- “Financial Year” retained for compliance and procedural timelines.
TDS & TCS Rationalization:
- Multiple provisions consolidated in one place for clarity and ease of compliance.
Implications:
- For Taxpayers & Practitioners:
- Reduces complexity and confusion in tax filing.
- Standardizes terminology to avoid discrepancies.
- For Tax Authorities & Legal System:
- Expected to reduce tax litigation and improve clarity.
- Streamlined structure may enhance compliance and enforcement efficiency.
- Broader Economic Impact:
- A modernized tax framework could improve India’s ease of doing business ranking.
- Potential for increased taxpayer compliance and better revenue collection.
