Ahead of the passage of the new Income Tax Bill, the Central Board of Direct Taxes (CBDT) has 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.
Following its introduction in the Budget Session, the new Income Tax Bill is currently being examined by the Select Committee of Parliament. It is expected that the Bill will be taken up for consideration during the Monsoon Session, with the new Income Tax Act likely to be passed soon thereafter. The government has stated that the new Bill aims to simplify language, eliminate redundancy, and streamline procedures and processes to enhance the taxpayer experience.
Questions about I-T Bill
According to officials, the success of the new statute will require a thorough analysis and internalisation of its objectives by all employees of the Income Tax Department. “While the Directorate of Training will prepare a comprehensive roadmap for training the workforce in understanding various aspects of the new Income tax Bill, Pr CCsIT (Principal Commissioner of the Income Tax) of all regions will also need to play a pivotal role in this process,” an official said. Further, they will need to take a lead role in understanding and conveying the finer nuances and objectives of the new statute to the taxpayers as well as tax administrators under their control, he added.
Accordingly, once the bill is passed, all Pr CCsIT will plan outreach activities to emphasise the basic tenets and objectives of the new Income Tax Act. The target is to organise at least five such activities in every quarter, beginning with the quarter in which the Bill is passed. All Pr CCsIT will draw a monthly training calendar, identifying the duration and various stakeholders to be covered through such training by June 30. Next, the official said they will ensure training to at least 50 per cent of the personnel of their region by March 31, 2026.
New Income Tax bill: How will it impact taxpayers?
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.
New Income Tax Bill: What’s in it for taxpayers?
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.
