Proposed Income Tax Bill Aims to Enhance Clarity in Tax Regulations, Experts Say

Synopsis

The proposed Income Tax Bill aims to enhance transparency in tax laws, making it easier for taxpayers to understand their obligations. Union Finance Minister Nirmala Sitharaman is expected to introduce the Bill soon, which will undergo scrutiny by the Parliament's Standing Committee on Finance.

Key Takeaways

The new IT Bill is designed to enhance transparency in tax regulations.
It aims to simplify the determination of tax residency.
No new taxes will be introduced under the new Bill.
Tax compliance is expected to improve significantly.
Changes to tax reliefs may be enacted through executive orders.

New Delhi, Feb 10 (NationPress) The proposed Income Tax Bill is designed to enhance transparency in tax regulations by utilizing clear and straightforward language in its provisions, enabling taxpayers to grasp their rights and duties effortlessly, according to industry experts on Monday.

Union Finance Minister Nirmala Sitharaman is anticipated to present the Income Tax Bill this week, which will be reviewed by the Parliament's Standing Committee on Finance.

The government's pledge to ‘trust first, scrutinize later’ has sparked discussions around the introduction of this new IT Bill. Various stakeholders await numerous modifications compared to the previous income-tax framework.

“The new IT Bill 2025 is expected to simplify the complexities surrounding the determination of an individual’s tax residency in India. Presently, it involves several conditions for classifying someone as a tax resident,” stated Harsh Bhuta, Partner at Bhuta Shah & Co.

At present, the income tax law contains an extensive array of tax provisions. The new IT Bill is expected to tackle this issue by removing redundant and outdated provisions, thereby significantly condensing its size.

Experts indicate that the new IT Bill will not introduce any new taxes but will focus on enhancing tax compliance.

Furthermore, it is anticipated that announcements related to income-tax reliefs or modifications to the income-tax law will no longer need to wait for budget proposals. The government may enact changes to relief through executive orders.

Bhuta added that the new IT Bill will aim to reduce scrutiny cases in instances of gross non-compliance, minimizing undue harassment targeted at honest taxpayers and decreasing litigation issues.

The upcoming IT Bill is poised to alleviate the complex compliance burden by streamlining the process, making it more accessible and understandable for all taxpayers, leading to savings in both cost and time.

Experts assert that the ongoing review of the Income-tax Act, 1961, aims to modernize and simplify India’s tax system in alignment with broader economic objectives.

It seeks to improve the ease of doing business, diminish ambiguity in interpretations, and enhance tax administration and compliance. This could contribute to increasing India’s tax-GDP ratio to global standards and fostering sustainable economic growth, said Sandeep Chaufla, Partner at Price Waterhouse and Co (PwC).