India's Income Tax Law Revision: Well Begun Is Still Only Half Done

The draft tabled simplifies its language, but we also need changes that go beyond form to address key aspects of substance

- KETAN DALAL

There has been significant press coverage of India's Income Tax Bill, 2025, which was introduced in Parliament on July 21. As readers will recall, a committee was set up in October 2024 to simplify the Income Tax Act; the panel's mandate was to simplify the language, reduce litigation and the compliance burden, and remove redundant or obsolete provisions. In that sense, the committee was restrained by its limited mandate.

A Lok Sabha Select Committee was set up to review the draft Income Tax Bill framed by the Simplification Committee, which submitted its report with 285 recommendations. A majority of these recommendations seem to be favored by the government; therefore, the bill framed by the simplification panel will likely be passed into law with some changes. However, there are some key aspects that need to be discussed.

The Income Tax Act of 1961 has been amended dozens of times, and with some 4,000 amendments, its language has become complex. In this context, the simplification panel has made a good attempt to offer clarity. For example, several tables and explanations have been added, and the number of sections has been reduced from 819 to 516.

However, there are concerns over several aspects. For example, there has been a tendency to delegate rule-making to the Central Board of Direct Taxes (CBDT)—as in the case of faceless assessments—whereby, compared to existing provisions, the CBDT would gain greater scope to make legislative-type changes without parliamentary oversight. This is worrisome.