Union Finance Minister Nirmala Sitharaman introduced a new Bill on Income Tax in the Lok Sabha on February 13 to simplify and update the existing tax system. The proposed bill, to be in force from April 1, 2026, has been referred to a Select Committee, which is to report to the House on the first day of the next Parliament session.
Despite objections raised by a section of opposition members, Sitharaman emphasized that the bill introduces sweeping structural reforms, making legal language more concise and tax provisions more compact. The new bill shortens the number of income tax sections to 536, making it more readable to taxpayers.
Key Highlights of the New Income Tax Bill
- Simplified Structure: The bill reduces the number of chapters and legal complexity, cutting down the word count of the Income Tax Act by nearly 50%.
- Terminology Changes: It replaces technical terms like “assessment year” and “previous year” with a more straightforward term – “tax year”.
- Improved Compliance: Multiple provisos and explanations have been eliminated to make compliance easier for taxpayers.
- Alignment with Economic Needs: The bill aims to bring the Income Tax Act, 1961 in line with modern economic realities, ensuring a more efficient and transparent tax system.
The Select Committee will now review the bill in detail before presenting its recommendations to Parliament in the next session.
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Source: Moneycontrol
