Simple language, 'tax year' idea in I-T bill set to be tabled today

Key aspects of the Bill

- Saubhadra Chatterji and Rajeev Jayaswal

NEW DELHI: Finance minister Nirmala Sitharaman is expected to introduce the Income-Tax (I-T) Bill, 2025 in the Lok Sabha on Thursday, with the emphasis being on clarity and simplicity.

The law aims to repeal redundant provisions of existing act and introduce new features such as provisions for low tax rates for cooperatives, tax on crypto-assets, incentives for start-ups, clarity on non-resident taxation, definition of capital gains, and the concept of a "tax year" to replace the confusing term "assessment year".

According to people familiar with the matter, the bill is 622 pages long and has 23 chapters, 16 schedules and 536 clauses.

The current Income Tax Act, as amended in 2024 is 823 pages long, and has 23 chapters (with several sub-chapters to accommodate innumerable amendments in last six decades) and 14 schedules.

To be sure, the bill does not make any new announcements in terms of tax exemptions or compliances. It does, however, provide clarity on anti-tax avoidance measures and transfer pricing regulations. The last refers to business between a company and its subsidiaries or arms of a company.

The aim of the new law, the people cited above, is to provide "ease of living" for citizens and "ease of compliance" for businesses with incentives for entrepreneurship, innovation and digital transactions.

That is pretty much what the finance minister said while presenting the Union Budget on February 1: "The new bill will be clear and direct in text with close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation."

The people, who asked not to be named, said the new law aims to consolidate and amend the existing Income-Tax Act, 1961.

The bill will likely be referred to the Standing Committee of Finance for scrutiny after its introduction in the Lok Sabha, they added.