The Union Cabinet on Friday approved the new income tax bill, which will replace the six decades old I-T Act, sources told PTI. The legislation will be introduced in Parliament next week and would be sent to the Standing Committee on Finance, the report added.
The new bill seeks to make direct tax law simple to understand and not to impose any new tax burden. It will not have provisions and explanations or long sentences.
Finance Minister Nirmala Sitharaman announced in Budget 2025-26 that the new tax bill will be introduced in the ongoing session of Parliament.
The minister had first announced a comprehensive review of the Income-tax Act, 1961 in her July 2024 Budget.
The CBDT had set up an internal committee to oversee the review and make the Act concise, clear, and easy to understand, which will reduce disputes, litigations, and provide greater tax certainty to taxpayers. Also, 22 specialised sub-committees have been established to review the various aspects of the Income Tax Act, the report added.
Public inputs and suggestions were invited in four categories — simplification of language, litigation reduction, compliance reduction, and redundant/obsolete provisions.
The income tax department has received 6,500 suggestions from stakeholders on review of the Income Tax Act.
Sitharaman’s big income tax relief
During her Budget 2025 speech, Nirmala Sitharaman announced that those with salaries up to ₹12 lakh per annum will pay nil income tax.
“The middle class provide strengths to the economy. In recognition of their contribution, we have periodically reduced the tax burdens. I am now happy to announce that there will be no income tax up to an income of ₹12 lakhs,” the minister said.
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Individuals earning up to ₹12.75 lakh in a year will not have to pay any taxes after she raised the exemption threshold from ₹7 lakh. She also altered tax slabs for people earning above this threshold to help save up to ₹1.1 lakh in taxes for those with income up to ₹25 lakh in a year.
(With PTI inputs)
