Revised Income Tax Bill Cuts Down Income Tax Act, 1961 Volume by 50%

Synopsis

The Income-Tax Bill, 2025, introduced in Parliament, aims to simplify and reduce the volume of the Income-tax Act, 1961 by nearly 50%. This involves restructuring and enhancing readability while maintaining core tax principles, reflecting the government's commitment to ease of doing business.

Key Takeaways

Reduction of Income Tax Act's size by 50%
New Bill consists of 23 chapters and 536 sections
Enhanced readability through simplification
Stakeholder engagement included 20,976 suggestions
Maintaining existing tax principles ensures stability

New Delhi, Feb 13 (NationPress) The newly introduced Income-Tax Bill, 2025, presented in Parliament on Thursday, signifies a major move towards streamlining the language and framework of the Income-tax Act, 1961, aligning it with international best practices, as stated by the Finance Ministry.

The overhaul has resulted in a dramatic reduction in the Act's overall size, making it significantly more accessible. The total word count in the new Income Tax Bill has been trimmed to 259,676 words from a substantial 512,535 words in the current Income Tax Act, 1961. This nearly 50% reduction translates to the removal of 252,859 words, the statement confirmed.

Consequently, the chapters in the new Income Tax Bill have decreased to 23 from 47 in the previous Income Tax Act, 1961. The sections have also been minimized to 536 from 819, which means the elimination of 283 sections, as explained in the statement.

This extensive cut has been achieved through the simplification of language, making the legislation more user-friendly while the consolidation of amendments has reduced complexities.

There has also been a structural rationalization through the use of tables and formulae, enhancing readability. In addition, the preservation of existing taxation principles has ensured continuity while boosting usability, the statement added.

Consultations were conducted with industry specialists and tax professionals, and simplification models from Australia and the UK were analyzed for best practices.

The simplification initiative was guided by three primary principles: textual and structural simplification for improved clarity, ensuring continuity and certainty without significant tax policy alterations and preserving tax rates for predictability among taxpayers, according to the finance ministry.

A three-pronged strategy was implemented focusing on eliminating complex language for better readability, removing redundant provisions for easier navigation, and logically reorganizing sections for convenient reference, as mentioned in the statement.

The government also prioritized extensive stakeholder engagement, consulting taxpayers, businesses, industry associations, and professional bodies. Out of 20,976 online suggestions received, relevant inputs were considered and incorporated where applicable.

The Income-tax Bill, 2025 demonstrates the Government's commitment to improving the ease of doing business by offering a tax framework that is simple and clear, the statement concluded.