India's Income Tax Reforms Aim for Enhanced Transparency and Taxpayer Support
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Synopsis
The Income Tax Bill 2025, effective from April 1, 2026, aims to create a transparent and taxpayer-friendly environment, representing a transformative shift in India's tax system, according to experts.
Key Takeaways
- Income Tax Bill 2025 introduces major reforms.
- Focus on simplification and modernization of tax laws.
- Clearer language to enhance understanding and compliance.
- Trust-based approach to tax administration.
- Empowers CBDT for efficient governance.
New Delhi, Feb 13 (NationPress) The upcoming Income Tax Bill 2025, set to be implemented on April 1, 2026, is poised to create a more transparent and taxpayer-friendly landscape, marking a significant milestone in India's taxation framework, as per industry experts on Thursday.
This Bill signifies a major transformation of India's tax legislation, indicating a crucial transition towards the simplification and modernization of the Income-Tax Act originally enacted in 1961.
Spanning 622 pages, the Bill aims to reduce the complexities associated with the 1961 Act, replacing complicated legal jargon with clear and straightforward wording.
“A remarkable feature of the Bill is the strategic incorporation of tables and formulas, which will facilitate easier interpretation of the provisions. The objective is to lessen disputes and litigation while providing greater certainty for taxpayers,” remarked Himanshu Parekh, Partner, Tax, KPMG in India.
The Bill notably adopts a “trust first, scrutinize later” approach, aligned with the government’s philosophy of “minimum government and maximum governance.”
In contrast to the 1961 Act, the new Bill empowers the Central Board of Direct Taxes (CBDT) to formulate tax administration regulations and implement digital tax monitoring systems, thereby enhancing efficiency without the need for frequent legislative amendments.
The Union Finance Minister, Nirmala Sitharaman, has presented the new Income Tax Bill, 2025, in the Lok Sabha.
The Bill will be forwarded to the Select Committee of Parliament prior to its final approval.
This proposed legislation aims to simplify tax language by introducing clearer terms, such as substituting 'assessment year' with 'tax year'. It will remove various convoluted provisions and clarifications, making it easier to comprehend and minimizing the potential for legal disputes. Several outdated clauses will also be eliminated during this simplification effort.
According to Rohinton Sidhwa, Partner, Deloitte India, this reform marks a significant move towards modernizing India’s tax structure, enhancing clarity and efficiency.
The Bill is expected to deliver a more streamlined and accessible tax system, making it simpler for citizens and businesses to meet their obligations while building trust in the system, he added.
