Union Finance Minister Nirmala Sitharaman introduced the much-anticipated New Income Tax Bill in Parliament on Thursday, aiming to simplify the 1961 Income Tax Act. The bill seeks to streamline tax provisions, reduce jargon, and make compliance easier for taxpayers.
Key Highlights of the New Income Tax Bill
The Finance Ministry emphasized that the bill is built on five core principles encapsulated in the acronym S.I.M.P.L.E:
– Streamlined structure and language
– Integrated and concise
– Minimised litigation
– Practical and transparent
– Learn and adapt
– Efficient tax reforms
Sitharaman highlighted significant improvements, stating, “The present law had over 800 sections, whereas the proposed law has only 536. The number of words has come down by half, and redundant sections have been omitted.”
One of the major amendments is the introduction of the ‘tax year’, replacing the simultaneous use of ‘financial year’ and ‘assessment year’ to simplify tax calculations. The bill also eliminates outdated provisions such as the fringe benefit tax and includes handy tables for TDS, presumptive taxation, salaries, and deductions for bad debt.
Opposition Reactions and Parliamentary Debate
Despite the intended simplification, opposition parties raised concerns. The Congress’ Manish Tewari and the RSP’s NK Premchandran criticized the bill for being more complex than the existing one.
Trinamool MP Saugata Roy further slammed the bill as “mechanical”, triggering a heated debate. Some opposition MPs even staged a walkout in protest.
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However, Sitharaman defended the bill, asserting that the new structure ensures transparency and efficiency. The bill was put to a voice vote, and despite opposition objections, it was passed and referred to a Joint Parliamentary Committee (JPC) for further review.
The JPC, chaired by Lok Sabha Speaker Om Birla, is expected to submit its report by March 10, 2025, coinciding with the second half of the Budget Session.
The existing tax slabs remain unchanged, ensuring stability for taxpayers. Additionally, key legal terms defined in court rulings will continue to be used, maintaining consistency in tax law interpretation.
Union Budget 2025: Major Tax Proposals
In her February 1 Union Budget 2025 announcement, Sitharaman introduced several tax-related changes, including:
– Tax rebate increased: Individuals earning up to Rs 12 lakh (Rs 12.75 lakh with standard deduction) will pay no income tax.
– New tax slab: A 25% tax bracket introduced for incomes between Rs 20 lakh and Rs 24 lakh.
These measures were widely welcomed and are believed to have contributed to the BJP’s decisive victory in the Delhi Assembly elections, where the party secured 48 out of 70 seats, significantly outperforming previous results.
Implementation Timeline
The New Income Tax Bill is set to come into effect from April 1, 2026, pending final parliamentary approval.
For further details, the Finance Ministry has provided an FAQ section on its official website to address common taxpayer queries.
