Income-tax Act 1961: Key Changes in the Income-tax Bill, 2025

Income-tax Act 1961

The Government of India has taken a significant step towards simplifying the Income-tax Act, 1961, with the introduction of the Income-tax Bill, 2025. This reform aims to make the tax framework clearer, more accessible, and user-friendly while ensuring continuity in tax policies. The Bill was tabled in Parliament on 13th February 2025 and brings comprehensive changes to the existing tax law.

Objective of the Simplification Exercise

The simplification exercise was guided by three core principles:

1. Textual and Structural Simplification: The language has been revised for better clarity and coherence, reducing legal jargon and technical complexity.
2. No Major Tax Policy Changes: The Bill focuses solely on improving structure and readability without altering core tax policies to ensure stability for taxpayers.
3. No Modifications in Tax Rates: Existing tax rates have been retained to maintain predictability and prevent disruptions for businesses and individuals.

Three-Pronged Approach to Simplification

To achieve these objectives, the government adopted a structured approach:

• Eliminating Complex Language: The new Bill removes intricate and outdated legal terminology to improve readability for taxpayers, professionals, and businesses.
• Removing Redundant Provisions: Outdated and repetitive sections have been eliminated, reducing unnecessary bulk in the legislation.
• Reorganizing Sections Logically: The structure has been redesigned to improve navigation and ease of reference.

Consultative and Research-Based Approach

The Government followed a consultative and research-based approach to ensure the reforms aligned with stakeholder expectations. Key steps included:

• Extensive Stakeholder Engagement: The Government invited public feedback and received 20,976 online suggestions, many of which were considered and integrated.
• Consultations with Industry Experts: Professional bodies, tax experts, and industry representatives were actively involved in shaping the final draft.
• International Benchmarking: Best practices from countries like Australia and the UK were studied to design an efficient and simplified tax structure.

Quantitative Impact of the Changes

The Income-tax Bill, 2025 introduces substantial reductions in the Act’s size and complexity. Key changes include:

Qualitative Improvements in the Income-tax Bill, 2025

In addition to reducing the complexity and size of the Act, the Government has introduced several qualitative improvements:

• Simplified Language: Complex legal terms have been replaced with clearer, more accessible language, making the Act easier to understand for taxpayers without professional expertise.
• Consolidation of Amendments: Numerous fragmented amendments introduced over the years have been consolidated to improve clarity and consistency.
• Removal of Obsolete Provisions: Redundant clauses that no longer align with current tax laws have been eliminated to reduce confusion.
• Structural Rationalization: The use of tables and formulae has been expanded to provide improved clarity in complex tax calculations.
• Preserved Taxation Principles: While improving usability, the Bill ensures continuity in core taxation principles, minimizing disruptions for taxpayers.

https://www.incometax.gov.in/iec/foportal/

Impact on Taxpayers and Businesses

The simplified tax framework under the Income-tax Bill, 2025 aims to enhance the ease of doing business in India. By improving readability, reducing complexity, and maintaining tax policy stability, the Bill ensures a smoother compliance process for:

• Individual Taxpayers who can now understand their tax obligations more easily.
• Small and Medium Enterprises (SMEs) that previously faced challenges navigating complex provisions.
• Large Corporations seeking predictability in tax planning and compliance.

Conclusion

The Income-tax Bill, 2025 reflects the Government’s commitment to creating a more accessible and efficient tax framework. By reducing legal complexity, consolidating amendments, and improving readability, the Bill simplifies compliance processes while preserving essential tax principles. This reform marks a crucial step towards improving India’s tax administration and enhancing taxpayer convenience.

Taxpayers are encouraged to stay informed about the new Bill’s provisions and consult professional advisors to understand its impact on their financial planning and compliance responsibilities.

For More Information :https://taxgyany.com/