The Union Cabinet has approved a new Income Tax Bill aimed at simplifying and modernising the tax system without introducing new taxes. The bill, effective from the financial year 2025-26, will reduce legal complexities, make compliance easier, and cut the law’s length by 50%. It focuses on a single tax regime and reducing litigation.
The Union Cabinet on Friday approved the new income-tax Bill, which is likely to be tabled in Parliament next week. The Bill is expected to reduce the number of sections by almost a third, according to a government official.
“We have tried to reduce sections by 25-30 per cent to make the law simpler and more concise. We have removed proviso and explanations and have halved the word count,” the official said.
The bill will not introduce new taxes. Instead, it will focus on simplifying tax laws, reducing legal complexities, and making compliance easier for taxpayers, confirmed the finance secretary on Thursday.
It will have shorter sentences, provisos and explanations. The government has also said that the new law will be 50% shorter than the current one. A major goal is also to reduce litigation.
The authorities have not been given excessive power, the official explained. “There is no excessive case of delegation. Substantive power relating to quantification of income and levy of rates remain with Parliament. Every single rupee has to be collected after Parliamentary approval, this is the fundamental principle of taxation and it can never change. However, some provisions could be made more compact by shifting the procedural details into rules,” he added.