Tax Transformation: Inside the 2025 Income Tax Bill

The Income Tax Bill 2025 has been introduced with a primary goal to reduce litigation, simplify corporate tax rules, and consolidate TDS deductions, according to PP Chaudhary, a member of the select committee overseeing the bill. Replacing the Income-Tax Act of 1961, the new bill significantly simplifies language.

Comparing the 1961 act with the new bill, there is a notable reduction in word count—from approximately 512,000 words to 260,000—and a decrease in sections from 819 to 536. Previously confusing provisions have been consolidated, ensuring easier navigation. By fine-tuning tables and formulas, interpretational issues such as those caused by terms like 'notwithstanding' have been addressed.

Presented in the Lok Sabha, the proposed bill now has 23 chapters and 536 provisions, down from 47 chapters and 819 provisions in the 1961 bill. The Select Committee adopted a series of 285 recommendations aimed at simplifying the tax regime. Their report highlighted 566 suggestions for enhanced clarity and interpretation, illustrating a comprehensive overhaul of the existing system.

(With inputs from agencies.)