Will the New Income Tax Bill Simplify Taxation and Reduce Disputes?

The Parliament is likely to receive a new bill in the form of the ‘New Income Tax Bill’. Finance Minister Nirmala Sitharaman is expected to table the bill in Parliament today, Tuesday (February 11).

The Union Cabinet has already approved the New Income Tax Bill on February 7. If the new bill is enacted, it will replace the existing Income Tax Act of 1961.

After being introduced in Parliament, the bill will be sent to the Standing Committee on Finance for review. The bill will then be sent back to the Cabinet with the recommendations of the parliamentary committee.

The government claims that the bill is part of an effort to reform the tax system, aiming to overhaul the existing tax structure. As the government claims, the bill will make the process more streamlined and transparent.

The Central Board of Direct Taxes has set up an internal committee to supervise the review process, with the intention of creating a more straightforward and comprehensible Income Tax Act. Twenty-two specialized sub-committees were formed to examine different aspects of the Act.

Reportedly, the new bill may introduce a reduction of the number of sections by about 30 percent to simplify the tax rules and their clauses. The number of pages may also be reduced by half.

The new bill will simplify direct tax laws while maintaining current tax obligations. By minimizing ambiguity and reducing the number of disputes, the new bill aims to increase tax certainty.

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