Key Points

The report of the Select Committee will be presented to the Lok Sabha on Monday, while the bill is likely to be passed in the Monsoon session, according to a member.

After the submission of the report by the Committee, the government will consider its recommendations. The government aims to implement the new Income Tax law from April 1, 2026.

The Income-tax Bill, 2025, which will replace the six-decade-old Income Tax Act of 1961, will make direct tax laws simple to understand, remove ambiguities and reduce tax disputes.

The simplification exercise was guided by three core principles, which include textual and structural simplification for improved clarity and coherence, ensuring continuity and certainty with no major tax policy changes and no modifications of tax rates to preserve predictability for taxpayers, the finance ministry said.

The Bill, based on global best practices, aims to enhance the ease of doing business by providing a tax framework that is simple and clear. It has led to a substantial reduction in the Act's volume, making it more streamlined and navigable. The total number of words in the new Income Tax Bill has been reduced to 259,676 from a massive 512,535 words in the existing Income Tax Act, 1961. This close to 50 per cent cut has resulted in a reduction of 252,859 words, according to an official statement.

Accordingly, the number of chapters in the new Income Tax Bill has come down to 23 from 47 in the existing Income Tax Act, 1961. Similarly, the number of sections has been cut to 536 from 819 earlier, which has resulted in removing as many as 283 sections.

This massive reduction has taken place with the simplification of language, making the law more accessible, while the consolidation of amendments has reduced fragmentation.

- IANS