Simplifying income tax regime

India's Income Tax Act, 1961, is arguably among the most complex pieces of legislation in a country once known for its maze of Kafkaesque laws. Though enacted 14 years after independence, it extended the colonial legacy of antiquated, verbose language—full of ifs, buts and caveats—that made it nearly impossible to decipher, even for experts with decades of experience.

- BAIJAYANT ‘JAY’ PANDA

Over the years, more than 4,000 amendments further complicated the Act. The inevitable panoply of disputes and litigation have been a drag on the economy. While India improved its ease of doing business ranking from 142 to 63, between 2014 and 2020, our much lower rank of 115 in “paying taxes” parameter remained a persistent concern.

In 2014, Prime Minister Narendra Modi championed the ‘minimum government, maximum governance’ movement. Since then, over 1,550 antiquated laws have been scrapped—including relics like the 19th century toll on boats plying the Ganga. True to that spirit, Finance Minister Nirmala Sitharaman announced last year in Parliament that the Income Tax Act would undergo a drastic simplification.

This February, she presented the draft Income Tax Bill 2025 in the Lok Sabha. It was referred to a select committee of MPs—under my chairmanship—for review.