The government is preparing to introduce the new Income Tax Bill in Lok Sabha on 10 February 2025. Earlier on 7 February, the Union Cabinet is expected to be approved. The Income Tax Act of 1961 will be abolished when this bill is implemented, and new tax rules will be effective.
Why is the new income tax bill necessary?
- The Income Tax Act of 1961 is 60+ years old.
- It has become complicated due to 298 sexes and 23 chapters.
- The new rules will be easy for taxpayers and administration.
- The government’s priority is to simplify the Direct Tax Code (DTC).
Finance Minister Nirmala Sitharaman announced last year
- In the union budget presented on 23 July 2024, Finance Minister Nirmala Sitharaman announced a review of the new Income Tax Act.
- He had said that the government will enact such laws, which will be clear and easy to understand.
Tax disputes will decrease
- Government’s objective: Reduce the number of tax disputes by simplifying tax law.
- Current situation: About 2.7 crore tax disputed cases are pending, out of which Rs 35 lakh crore is stranded.
- Simple rules will increase the participation of taxpayers and improve compliance.
Major features of new rules
1. Easy rules to read and understand
- The new law will be written in low sex and simple language.
- It has been prepared keeping in mind the international tax standards.
2. Non-essential tax rules will be removed
- Proposal to remove many old and irrelevant rules.
- Laws related to residency will be simplified.
- Capital Gens Tax will be further clarified.
3. More use of technology
- Income tax filing and compliance will be made technology-friendly.
- Digital tax system will be strengthened.
