By Gaurav Mehndiratta
Finance minister Nirmala Sitharaman tabled the Income-Tax Bill, 2025 yesterday, which will replace the Income-Tax Act, 1961. With simpler provisions making the new Bill easy to comprehend, Gaurav Mehndiratta explains that both taxpayers and tax authorities are likely to benefit
Structural differences in the existing Act and the new Bill
The government has kept the course and the essence of the Bill very similar to the existing Income-Tax Act. The provisions have been simplified, and various redundant and obsolete sections have been omitted. At the same time, formulaes and tables have been inserted to enhance clarity and readability for any stakeholder. In the Bill, the words have been almost halved as compared to the existing law, and this demonstrates the efforts made in simplifying the law and attempting to bring in more tax certainty.
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A key change is the replacement of concepts of ‘assessment year’ and ‘previous year’ with the term ‘tax year,’ in line with the globally used terminology. This will bring in more clarity for people to understand and carry out compliances.
Another example of the simplification is effective use of tables in the Bill. The various timelines in the existing income-tax law could be overwhelming to a reader, and the proposal to bring in a table for timelines should provide ease of understanding.
What are the additions and deletions?
The government had already been addressing requirements through continuous changes in the existing income-tax law. Some of the recent changes, which were warranted on account of the changing economic and compliance landscape, such as introduction of provisions relating to “Significant Economic Presence”, existing concessional tax rates and new tax regime, have been carried forward in the Bill. Similarly, various provisions, which have completed their life, such as Sections 80HHC and 10A (which were export income based benefits) have been removed completely from the law. The taxation of agricultural income still continues to remain exempt under the proposed Bill. While there are no changes from the TDS applicability/ implementation perspective, the provisions themselves have been made easy to understand by presenting them in a tabular form.
Is this version easier to understand?
Yes, the bill scores high on this aspect. It has delivered on simplifying the readability and interpretation of the tax law by using simple language as against traditional legal language.
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