On February 13, 2025, Finance Minister Nirmala Sitharaman presented the Income Tax Bill 2025 in the Lok Sabha, aiming to simplify India’s tax laws. The bill seeks to replace the existing Income Tax Act of 1961, which has become complex due to numerous amendments over the years.
The new bill proposes to reduce the number of sections from the current 819 to 536, making the tax code more straightforward and user-friendly. Sitharaman emphasized that the revised legislation uses plain language to enhance understanding and compliance among taxpayers.
However, the introduction of the bill was met with resistance from opposition members. Several MPs staged a walkout, expressing dissatisfaction with the proposed changes. Specific objections included concerns about the number of sections in the new bill and the nature of the revisions.
In response to these objections, Sitharaman clarified that the reduction in sections aims to streamline the tax code by eliminating outdated provisions. She noted that the original 1961 Act had 298 sections, which expanded to 819 due to various amendments. The new bill’s 536 sections represent a consolidation and simplification effort.
The Finance Minister also addressed concerns about the nature of the changes, stating that they are substantial and not merely mechanical. She highlighted that the bill significantly reduces the word count and presents tax rates in tables for clarity. The goal is to make the tax laws more accessible and reduce litigation arising from complex provisions.
Following its introduction, the bill is expected to be referred to a newly constituted Select House Committee for further examination. The committee will review the bill and submit its report in the next parliamentary session.
The government’s initiative to overhaul the income tax law reflects a commitment to creating a more transparent and efficient tax system. By simplifying the tax code, the government aims to encourage voluntary compliance and reduce disputes, ultimately fostering a more taxpayer-friendly environment.
