The new direct tax code or the new income tax bill, set to be introduced in the Budget session of the parliament, and announced in the Budget 2025-26 by finance minister Nirmala Sitharaman will not include any new taxes, finance secretary Tuhin Kanta Pandey told Moneycontrol in an interview. The new direct tax code bill is an entirely new bill, Pandey clarified.
“That is entirely a new bill. And the new bill has to be passed. It is an entirely new bill. It is rewritten”.
On whether the new bill could bring in any additional taxes, Pandey clarified:
“It will not change (tax rates) in that because that will be the prerogative of the tax policy. But structurally, it undergoes a massive change. The way it reads, the way it connects, the way it is understood. And the way the redundancy is removed. So, rationalization and simplification exercise will follow in that.”
The new bill brings in a host of reforms and will be applicable from the 1st of April. On the revision of tax slabs and reforms, Pandey added:
“This money (tax cuts) through which the government is basically transferring the decision making from the government to the people, there is absolutely no problem with that. As people, as taxpayers, they will do either of the three things. They will either consume or they will save or they will directly invest. In either of the three situations, given our current state of the economy, it suits us.”
On the reforms expected in the new direct tax bill- Pandey iterated that the new bill will carry on the reforms that have been brought in including decriminalisation of offences.
Some of those decriminalisations we have already done. So the point is, whatever reforms have been done, it will be seamlessly carried forward, he added.
On whether the new code could hold surprises by the way of an increase in capital gains tax or securities transaction tax: “No, nothing. Tax rates etc. is an annual exercise which is undertaken by the Finance Minister and it is not there. We are talking of a tax law which enables the structure. It says what is to be done, done what. And this one, as FM also said in her speech, that will be close to half of the pages. The chapters will be close to half. There will be a lot of consolidation… Nothing that the taxpayer should be worried about.”
