New I-T Bill may be introduced in Parliament next week
What's the story
The Indian government is likely to introduce the new Income Tax Bill in Parliament on August 11. The proposed legislation wants to replace the six-decade-old Income Tax Act of 1961 with a more modern and simplified law. The new Bill seeks to reduce litigation, enhance clarity, and make compliance easier for taxpayers across India.
Legislative changes
Bill nearly half the size of existing law
The new Income Tax Bill is almost half the size of the existing law, with a word count of 2.6 lakh compared to the current 5.12 lakh. The number of sections will be reduced from 819 to 536 and chapters from 47 to 23. This streamlined structure is aimed at making the law more accessible and understandable for both taxpayers and tax professionals alike.
Taxpayer adjustments
Proposed single 'tax year' to eliminate confusion
The new Bill proposes to replace the dual concepts of "previous year" and "assessment year" with a single "tax year." This is aimed at aligning income earning and tax filing within a single financial year, eliminating confusion. The Bill also proposes provisions for the digital documentation, clearer compliance guidelines, and modern dispute resolution frameworks as part of its commitment to a more digitally integrated tax system.
Committee recommendations
Final draft shaped by Lok Sabha Select Committee
The final draft of the Bill has been influenced by a Select Committee of the Lok Sabha, chaired by BJP MP Baijayant Panda. The committee submitted a detailed 4,500-page report with 566 suggestions aimed at offering further relief and clarity. Some suggestions include, an equitable formula for calculating deductions on house property income, protection for small taxpayers from filing returns solely to claim refunds for deducted TDS, and clearer tax rules for R&D investments.
Tax stability
No changes in tax rates or slabs
The new Income Tax Bill does not propose any changes to the existing tax rates or slabs. However, its focus on simplifying the legal framework is expected to have a major impact on tax administration in India. The final tabling of this landmark legislation is likely scheduled for August 11, with implementation slated from April 1, 2026, after it clears parliamentary hurdles.