India's New Income Tax Bill: A Major Overhaul for Simplicity & Transparency

The government is reshaping tax laws, simplifying them, and introducing 'Tax Year' for clearer compliance, all of which will take effect in April 2026

- By Satyam Mishra

UNION Finance Minister Nirmala Sitharaman tabled the new Income Tax Bill in the Lok Sabha on February 13, introducing extensive reforms to simplify tax laws and improve compliance. The bill, set to take effect from April 1, 2026, has been referred to a Select Committee, which will submit its report in the next Parliament session.

Sitharaman highlighted that the changes are not merely mechanical but a fundamental restructuring of the tax framework. The proposed legislation reduces the number of income tax sections from 819 (effectively 298) to 536, making the legal framework more concise and accessible. Provisions that have become obsolete have been removed, and key aspects such as Tax Deducted at Source (TDS) rules have been consolidated into a single clause for ease of reference.

“Substantial changes are being made in the Income Tax Bill, chapters are being reduced. It is not a mechanical change. The number of words in the earlier Income Tax Act was 5.5 lakh, which will now be reduced by half. It's a substantial change,” Sitharaman stated in Parliament.

Clarity is an important aspect of the changes. “The proposed legislation is streamlined to 566 pages, down from over 800 in the current Act. It introduces ‘tax year’, reducing confusion. Additionally, a time limit has been set for disposing of appeals at the first appellate authority level to address backlog issues,” explained Chintan Vajani, Leader-Taxation and FEMA Advisory, NPV and Associates.