Union Cabinet approves new I-T Bill; will be presented in Parliament next week
The Union Cabinet has approved the new Income Tax Bill on Friday, February 7, potentially leading to its introduction in the Lok Sabha early next week. This bill is part of a larger effort to reform the tax system and aims to overhaul the existing tax structure to make it more streamlined and transparent.
The Union Budget 2025 announced that the Ministry of Finance will table the new Income Tax Bill in front of the Union Cabinet this week. Union Finance Minister Nirmala Sitharaman, in her annual press conference after the Budget, said that she hopes that the bill passes without any difficulties.
The Indian government aims to bring simplicity to the taxpayers with the new income tax bill and also announced that it will be 50 per cent less in text and clearer compared to the previous one.
Key Highlights of the New Bill as per Reports:
Single Tax Regime: The Bill is expected to converge multiple tax regimes into a unified framework, reducing compliance burdens and providing greater tax certainty for individuals, companies, and other entities.
Rationalization of Withholding Tax: The withholding tax provisions are likely to be simplified further, with potential reductions in rates and increased thresholds to ease the tax burden on businesses and individuals.
Anti-Abuse Provisions: The New Bill aims to clarify exceptions to anti-abuse provisions, addressing unintended consequences for genuine transactions and promoting ease of doing business.
Litigation Reduction: Measures such as pre-litigation mediation, new dispute resolution mechanisms, and a defined litigation policy are expected to significantly reduce the lengthy litigation lifecycle, which currently spans up to a decade.
Removal of Obsolete Provisions: Redundant and outdated provisions in the current law will be eliminated, making the tax framework more precise and objective.
The government’s approach to codifying income-tax laws through the lens of ‘justice’ (Nyaya) rather than ‘punishment’ (Danda) reflects its commitment to building trust among taxpayers. Over 6,500 public suggestions were considered during the drafting process, showcasing active stakeholder involvement. Additionally, the Central Board of Direct Taxes (CBDT) formed an internal committee to oversee the review and drafting of the Bill over a six-month period.
