New Income Tax Bill | Gist of Rajya Sabha TV / RSTV (now Sansad TV) - UPSC PDF Download

Introduction

The Income Tax Bill 2025, passed by the Indian Parliament, replaces the 1961 Income Tax Act, streamlining tax laws with 536 sections (down from 819) and 23 chapters (from 47), cutting word count by nearly half. Discussed on Sansad TV’s Perspective with Mr. Wayde Jen (former ICAI president), Mr. Sanjay Sait (BJP Rajya Sabha MP), and Mr. KK Sharma (former DG, Income Tax), the bill introduces 39 tables and 40 formulas to enhance clarity, reduce litigation, and simplify compliance without altering tax rates. Effective from April 1, 2026, it aligns with India’s Viksit Bharat vision for 2047.

Key Features

• Simplified Structure: Reduces sections from 819 to 536, chapters from 47 to 23.
• Clarity Tools: Introduces 39 tables and 40 formulas for transparent tax computation.
• Tax Year Reform: Replaces ‘previous year’ and ‘assessment year’ with a unified ‘tax year’.
• Litigation Reduction: Incorporates judicially settled phrases to minimize disputes.
• Modern Administration: Supports faceless assessments and future adaptability.

Key Highlights

• Historic Reform: Replaces 64-year-old Income Tax Act with a streamlined framework.
• Simplified Tax Year: Unified term reduces confusion in filings and assessments.
• No Rate Changes: Focuses on procedural clarity, not tax liability alterations.
• Transparency Boost: Tables and formulas enhance precision and reduce disputes.
• Political Support: Ruling coalition backs bill despite opposition boycott.
• Smooth Transition: Awareness campaigns planned for April 1, 2026 rollout.
• Economic Growth: Supports ease of doing business and India’s 2047 vision.

Key Insights

1. Unified Tax Year
   Replacing ‘previous year’ and ‘assessment year’ with ‘tax year’ eliminates confusion, streamlining compliance for taxpayers and authorities.

2. Consolidated Provisions
   Consolidating exemptions and related clauses into thematic chapters reduces complexity and interpretive disputes, enhancing comprehension.

3. Formulaic Clarity
   39 tables and 40 formulas replace dense text, standardizing computations and minimizing litigation through precise, transparent tax rules.

4. Stable Tax Rates
   Retaining existing rates ensures taxpayer stability, focusing reform on administrative efficiency rather than increasing tax burdens.

5. Political Milestone
   Passed despite opposition boycott, the bill reflects strong coalition support and aligns with India’s goal to be a top global economy by 2047.

6. Compliance Boost
   Clearer laws and reduced ambiguity are expected to increase voluntary compliance, expanding the tax base and boosting revenues.

7. Future-Proof Design
   Faceless assessments and judicially settled terms ensure adaptability to evolving economic and digital needs, with provisions for future amendments.

8. Awareness and Transition
   Extensive awareness campaigns and timely rules issuance will ensure a seamless shift to the new law by April 2026.

9. Ease of Doing Business
   Enhanced clarity and reduced compliance costs attract investment, supporting India’s global competitiveness and economic growth.

10. Litigation Reduction
    Judicially settled phrases and formulaic provisions minimize disputes, easing burdens on courts and fostering fair tax administration.

11. Efficient Drafting
    Completed in six months with 75,000 person-hours and 36 committee sittings, showcasing government commitment to robust reform.

Challenges and Opportunities

• Challenges: Managing opposition concerns, ensuring taxpayer education, and handling transition complexities.
• Opportunities: Boosting compliance, reducing litigation, and enhancing India’s global business environment.

Conclusion

The Income Tax Bill 2025 is a transformative reform, simplifying India’s tax system with fewer sections, clear tables, and formulas, while retaining existing rates. By reducing litigation, enhancing transparency, and supporting ease of doing business, it strengthens India’s economic framework. With awareness campaigns ensuring a smooth transition by April 2026, the bill aligns with the Viksit Bharat vision, fostering compliance and growth for a developed India by 2047.