The Select committee on new Income Tax bill will invite suggestions from various stakeholders and will seek clarifications from the Central Board of Direct Taxes (CBDT). The committee is expected to finalise its recommendations by the first week of the monsoon session and present it to the Parliament.
The 31-member panel led by Bharatiya Janata Party’s Baijayant Panda will be reviewing the new Income Tax bill. The CBDT, in charge of formulating policies related to direct taxes, is preparing a detailed presentation for the panel on the various changes in the processes, policy and each chapter. The board will also separately answer queries raised by the committee members during the entire review process, a senior government official told Moneycontrol.
The new I-T bill will usher in a more transparent, efficient and taxpayer-friendly system, and the forthcoming discussions and recommendations will play a pivotal role in finalising the new bill, he said.
ABOUT THE NEW I-T BILL
The new I-T bill aims to simplify tax administration and enhance compliance. It was announced by Finance Minister Nirmala Sitharaman in the budget presented earlier this year, and has since been referred to the select committee for review. Though there is no policy change in the new bill, with simplification, the official noted, but added, “Some litigation will go down. The more you simplify the structure, the less litigation will be created.”
The bill also does away with archaic terminology and incorporates updated definitions to align with contemporary economic practices. One of its fundamental objectives is to modernise the language used in the tax code, making it more intuitive and aligned with global norms. For instance, the bill replaces the term “previous year” with “tax year”, a shift aimed at reducing ambiguity and bringing India’s tax system in line with international standards.
The Income-tax Act of 1961 has been the cornerstone of India’s taxation system for over six decades. However, over the years, it has undergone numerous amendments, leading to increased complexity and challenges in compliance. Recognising the need for a comprehensive overhaul, the government in Budget 2025 announced a new direct tax bill aimed at replacing the existing act.
By simplifying the tax structure and reducing litigation, the government aims to create a more conducive environment for businesses and individual taxpayers alike. This reform is anticipated to boost compliance, widen the tax base and ultimately enhance revenue collection, thereby supporting the government’s developmental goals.
