The Indian government will introduce the new Income Tax Bill, 2025, during the Monsoon session of Parliament. The bill aims to replace the Income Tax Act, 1961, simplifying tax laws, reducing disputes, and enhancing ease of doing business. Finance Minister Nirmala Sitharaman confirmed the development in the Lok Sabha on March 26, 2025. The new bill has been structured for clarity and coherence, significantly reducing the number of sections and chapters while maintaining taxation principles.
The Indian government is set to introduce the Income Tax Bill, 2025, in the Monsoon session of Parliament, replacing the Income Tax Act, 1961. The bill aims to simplify direct tax laws, reduce tax disputes, and enhance ease of doing business in India. Finance Minister Nirmala Sitharaman confirmed the development in the Lok Sabha on March 26, 2025.
The Income Tax Act, 1961, has been in place for over six decades, and the government has been working on a modernized framework to improve clarity and reduce complexities. The new bill focuses on three core principles:
- Textual and structural simplification for improved readability and coherence.
- Continuity and certainty by avoiding major tax policy changes.
- Predictability for taxpayers by maintaining existing tax rates.
According to the Finance Ministry, the new bill follows global best practices and is designed to streamline India’s tax framework. One of the key changes includes a 50% reduction in the length of the Act, cutting the total word count from 512,535 to 259,676. This reduction helps in making the law more accessible and easier to navigate.
Additionally, the number of chapters has been reduced from 47 to 23, and sections have been trimmed from 819 to 536, eliminating 283 unnecessary provisions. This structural reform aims to improve readability while preserving taxation principles.
The new framework has undergone extensive consultation with industry experts, tax professionals, and international models from Australia and the UK. The government also considered 20,976 online suggestions from stakeholders, incorporating relevant inputs where feasible.
With a focus on removing complex language, eliminating redundant provisions, and reorganizing sections logically, the government aims to create a tax system that is transparent, efficient, and taxpayer-friendly.
The Monsoon session of Parliament will play a crucial role in shaping India’s tax future, with discussions expected to refine the new Income Tax Bill, 2025 before its implementation.
