The Income-tax Bill, 2025 was tabled in Parliament today, marking a significant step toward simplifying the language and structure of the Income-tax Act, 1961.
The simplification exercise was guided by three core principles:
- Textual and structural simplification for improved clarity and coherence.
- No major tax policy changes to ensure continuity and certainty.
- No modifications of tax rates, preserving predictability for taxpayers.
A three-pronged approach was adopted:
-
- Eliminating intricate language to enhance readability.
- Removing redundant and repetitive provisions for better navigation.
- Reorganizing sections logically to facilitate ease of reference.
Consultative and Research-Based Approach
The Government ensured widespread stakeholder engagement, consulting taxpayers, businesses, industry associations, and professional bodies. Out of 20,976 online suggestions received, relevant suggestions were examined and incorporated, where feasible. Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices.
Outcomes of the Simplification Exercise Quantitative
Impact
The review has led to a substantial reduction in the Act’s volume, making it more streamlined and navigable. Key reductions are summarized below:
|
Item
|
Existing Income-tax Act, 1961
|
Proposed in the Income-tax Bill, 2025
|
Change (Reduction/Addition)
|
|
Words
|
512,535
|
259,676
|
Reduction: 252,859 words
|
|
Chapters
|
47
|
23
|
Reduction: 24 chapters
|
|
Sections
|
819
|
536
|
Reduction: 283 sections
|
|
Tables
|
18
|
57
|
Addition: 39 tables
|
|
Formulae
|
6
|
46
|
Addition: 40 formulae
|