Union Finance Minister Nirmala Sitharaman will introduce the new Income-Tax Bill in the Lok Sabha on February 13. The bill aims to consolidate and amend the country's taxation laws.
The bill seeks to replace the six-decade-old Income Tax Act of 1964 which has become increasingly voluminous as amendments were added over the years. The new bill does not introduce any new taxes but only simplifies the language of the existing Income Tax Act. The new law is expected to come into effect from the beginning of April 2026.
According to experts, the new bill will eliminate several ‘obsolete’ sections of the existing act, reduce litigation, and improve compliance. It is also expected to simplify the tax laws — ensuring they are more transparent, easier to interpret and taxpayer friendly.
The bill will also replace terminologies such as assessment and previous year with a simplified concept of 'tax year' as part of the move to make the document easier to understand. Tax year — the 12 months beginning from April 1 — will replace the present concept of assessment and the previous year. Currently, income earned in the ‘previous year’ is being assessed in the ‘assessment year’. To give an example, income earned between April 2024 and March 2025 is now assessed in FY 2025-26.
The new bill has omitted redundant sections, like those relating to Fringe Benefit Tax. It is free from 'explanations or provisos', making it easier to read and comprehend. The word 'notwithstanding'—which was used excessively in the existing Income Tax Act—has been done away with the term 'irrespective'.
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