Budget 2025-26: The government may introduce a new income tax bill in the upcoming budget session of Parliament. Its objective is to simplify the current Income Tax Law, make it understandable and reduce the number of pages by about 60 percent. Finance Minister Nirmala Sitharaman had announced a comprehensive review of the 6 decade old Income Tax Act, 1961 within 6 months in the full Budget 2024 presented in July 2024.
According to news agency PTI, a source said, “The new income tax law will be introduced in the budget session of Parliament. This will be a new law, not an amendment to the existing law. “The draft law is currently being considered by the Law Ministry and is likely to be introduced in Parliament in the second half of the budget session.”
When is the budget session starting?
The budget session of Parliament will run from January 31 to April 4, 2025. The first part will run from 31 January to 13 February. The session will begin with President Draupadi Murmu addressing the joint sitting of the Lok Sabha and the Rajya Sabha. After this the Economic Survey will be presented for the financial year 2024-25. The Union Budget for the financial year 2025-26 will be presented on February 1. The second part of the budget session will be held from March 10 to April 4.
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CBDT formed internal committee
Following Sitharaman’s announcement for a comprehensive review of the Income Tax Act, 1961, the CBDT had constituted an internal committee to oversee the review and make the Act concise, clear and easy to understand. This will reduce disputes and litigation. 22 special sub-committees have been formed to review various aspects of the Act.
Inputs and suggestions were sought from the public in 4 categories – simplification of language, reduction in litigation, lack of compliance, and unnecessary/obsolete provisions. The Income Tax Department has received 6,500 suggestions from stakeholders to review the Act.
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According to PTI, sources said that there will be a drastic reduction in the provisions and chapters and obsolete provisions will be removed. The Income Tax Act, 1961 currently has about 298 sections and 23 chapters. These include taxes like personal income tax, corporate tax, securities transaction tax, gift and wealth tax. Sitharaman had said in her July 2024 budget speech that the objective of the review is to make the Income Tax Act concise, clear, easy to read and understand.