Cabinet clears new income tax bill, likely to be tabled in Parliament next week

The Union Cabinet on Feb 7 cleared the new income-tax bill that is proposed to replace the existing six-decade-old Income-tax Act. The new income-tax bill is now likely to be introduced in Parliament on Feb 10, sources said.

The new income-tax bill is aimed to make the language and implementation of the income tax legislation simpler for taxpayers. On Feb 6, Finance Secretary Tuhin Kanta Pandey said that the new income-tax bill will not have long sentences, provisos, and explanations and will mark a different way of engagement with citizens, with no aim to put any new tax burden.

The Bill will include the recent changes in income tax rates, slabs, and Tax Deducted at Source (TDS) provisions will also be reflected in it, he said.

While presenting the Union Budget for 2025-26 on Feb 1, Union Finance Minister Nirmala Sitharaman stated that a new income tax legislation will be introduced by the government next week in the ongoing Budget session of the Parliament.

In her Budget speech, Sitharaman had said that the government had earlier ushered in Bharatiya Nyaya Sanhita replacing Bharatiya Danda Sanhita. “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,” she had said.

In October last year, the Income Tax department had announced the formation of an internal committee to review the Income-tax Act and invited public inputs and suggestions on four key areas — simplification of language, litigation reduction, compliance reduction, and obsolete provisions. It had then received around 6,500 inputs and suggestions from the public.

Earlier the government attempted to simplify the Income-tax Act several times. In 2018, a task force was formed to draft a new direct tax law that submitted its report in 2019.

Direct Taxes Code (DTC) was earlier proposed by the UPA I government, a draft Bill was put up in August 2009 and it was tabled in Parliament in 2010.

The Bill, after review by the Standing Committee, was then revised twice, in 2012 and 2014, but lapsed with the dissolution of the 15th Lok Sabha.