With the New Income Tax Bill likely to be introduced by Finance Minister Nirmala Sitharaman in Lok Sabha today, speculation is rife about the contents of the new bill and its potential impact on taxpayers.
According to tax experts, the new income tax bill is likely to bring a transformative shift in India’s taxation system by focusing on simplification and modernisation rather than introducing new taxes. While details are yet to be made public, the bill is anticipated to reduce legal complexities, streamline compliance, and make tax laws more accessible to taxpayers.
“With the government aiming to shorten the law by 50% and eliminate redundant provisions, this reform could lead to fewer disputes and a more efficient tax administration. If implemented as expected, it may also introduce lower penalties for certain offences, creating a more taxpayer-friendly environment. By enhancing the ease of doing business and improving the tax-to-GDP ratio, this bill has the potential to drive long-term economic growth while ensuring a fairer and more transparent tax system for all,” said Adhil Shetty, CEO of Bankbazaar.com.
For the banking and financial sector, the simplification and modernisation of tax laws will act as a catalyst for growth. Easier compliance and reduced legal complexities will encourage greater participation from businesses and individuals. A more predictable and transparent tax environment will also attract foreign investors, boosting liquidity and expanding opportunities for banks and financial institutions.
“Additionally, the reduction in litigation and lower penalties for certain offences will free up resources for both taxpayers and financial entities, allowing them to focus on innovation and expansion. Overall, this reform is poised to strengthen the financial ecosystem, driving India’s economic growth and positioning the country as a more competitive player in the global market,” added Shetty.
It may be noted that after the approval of the New Income Tax Bill by the Union Cabinet on Friday, Finance Minister Nirmala Sitharaman had indicated on Saturday that the bill may be introduced in Parliament next week.
This bill, set to replace the six-decade-old Income Tax Act, 1961, aims to simplify tax laws, enhance compliance, and reduce litigation. The FM had first proposed a comprehensive review of the tax system in the Budget 2024, emphasizing the need for a clearer and more taxpayer-friendly framework.
The bill will undergo parliamentary scrutiny before final approval and be implemented in the fiscal year 2025-26.
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