A Parliamentary Committee is scheduled to meet on Thursday to adopt report on new Income Tax Bill. Meanwhile, the government has listed the Income Tax Bill to be taken up for consideration and passage during Monsoon Session.
According to notice sent to members of Select Committee, under the Chairmanship of BJP MP Baijayant Panda, the meeting will take place for “consideration and adoption of the Draft Report on the Income Tax Bill, 2025 and the Income Tax Bill, 2025 as amended.”
At the same time, a Lok Sabha Bulletin has listed the bill for “Consideration and passing after the Report of the Select Committee is presented to Lok Sabha,” as part of list of Legislative Business for the Monsoon Session, starting on July 21 and will continue till August 21.
Once the Committee submits its report, the government will consider recommendations and if required, then will take approval from the Cabinet before moving the bill for discussion and passage in the Lok Sabha.
The government aims to implement the proposed law with effect from April 1, 2026. The bill was introduced during the Budget Session this year.
The government has stated that the new Bill aims to simplify language, eliminate redundancy, and streamline procedures and processes to enhance the taxpayer experience.
The new Bill, once enacted, will replace the Income Tax Act, 1961. The current Income-tax Act was enacted in 1961 and came into existence with effect from April 1, 1962. It has been amended nearly 65 times with more than 4,000 amendments,” she said, justifying the need for a new Bill.
After the Bill was introduced in February, in a detailed frequently asked questions (FAQ), the Finance Ministry said that it proposes to eliminate redundant provisions, reducing its length by nearly half.
The drafting style is straightforward and clear, making the provisions easier to understand. This minimises cross-references and conflict by aggregating all applicable provisions related to a single scenario in one place.
While the 1961 Act contains numerous cross-references to sections, sub-sections, clauses, sub-clauses, items and sub-items, making the provisions challenging to interpret, the new Bill adopts a simplified reference system, allowing provisions to be cited by simply mentioning the section. For instance, section 133 (1)(b)(ii) in the new Bill would indicate sub-clause (ii) of clause (b) of sub-section (1) of section 133 in the existing Act.
A significant aspect of the Bill is the elimination of the concepts of ‘previous year’ and ‘assessment year’ and the use of just ‘tax year’. Prior to 1989, the concept of ‘previous year’ and ‘assessment year’ was introduced because taxpayers could have different twelve-month previous years for each source of income. From April 1, 1989, the previous year was aligned to a financial year in all cases.
Meanwhile, ahead of the passage of the new Income Tax Bill, the Central Board of Direct Taxes (CBDT) has already set in motion a detailed implementation program. According to the action plan for fiscal year 2025-26, the board aims to train at least half of its workforce by the end of March next year.
