The new income tax law will replace the existing Income Tax Act of 1961. The tax Bill is being brought to make the tax process simple and clear.

Presenting the Union Budget 2025-26 on February 1, Finance Minister Nirmala Sitharaman announced the government’s plan to introduce the new Income Tax Bill in Parliament. In her budget speech last Saturday, the FM said the “clear and direct” Income Tax Bill will be introduced “next” week. But now media reports are suggesting that the new tax Bill may be tabled in Parliament on Monday as before this it will go before the Union Cabinet for approval tomorrow, i.e., Friday.

What happens once the new Income Tax Bill is tabled in Parliament?
After the Union Cabinet clears tomorrow the Income Tax Bill, it will be introduced in the Lok Sabha on Monday. This Bill being a Finance Bill needs to be submitted in the Lok Sabha only, not the Rajya Sabha. The Rajya Sabha, however, can recommend amendments to the Bill. And it is up to the Lok Sabha whether to accept the recommendations or not.

What is the objective of bringing the new tax Bill?
The new income tax law will replace the existing Income Tax Act of 1961. The tax Bill is being brought to make the tax process simple and clear.

The new income tax law will be in simple language which will help taxpayers and tax experts under the provisions better. Also, digital processes will be promoted, which will make tax filing completely digital. This can also reduce legal disputes. Apart from this, consideration can be given to combining the assessment year and financial year to make a tax year.

Income Tax Bill: What is special?
In his recent media interviews post budget, Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal clearly said that the aim is to bring people into the new tax regime.

Currently, about 75% of taxpayers are part of the new regime and after the latest budget announcements for taxpayers, 95-97% of taxpayers will move to the new regime. Agarwal also said that filing tax returns will now be easier.

The government has sought suggestions from industry players on the new Bill. The new Bill was drafted within six months and the focus was on simplifying the language to make tax compliance easier for taxpayers.

The new tax Bill has been prepared keeping in mind international standards, the government claims. Also, the new law has been made concise, as old provisions have been removed, making it less bulky.

With regard to updated I-T returns (ITR-U), Agrawal said in the last three years about 90 lakh such returns were filed. Around Rs 8,500 crore additional revenues were garnered.

The new bill, however, is completely new and has been rewritten. There will be no change in tax rates in this bill. The finance ministry officials said that the aim of this new budget is to promote growth, without creating inflation problems.