The Union Cabinet is expected to approve the new Income Tax Bill on Friday, February 7, which could result in its introduction in the Lok Sabha early next week, government sources told Business Today. The purpose of the new Income Tax Bill is to simplify and streamline the tax process by replacing the current Income Tax Act of 1961.
During her Budget presentation on February 1, 2025, Union Finance Minister Nirmala Sitharaman announced that the new Income Tax Bill will be presented in Parliament in the following week. The Union Budget was unveiled on Saturday, February 1, marking the beginning of the process to replace the longstanding law that has been in place for close to six decades.
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The upcoming income tax bill is scheduled to take effect starting from the fiscal year 2025-26 and will be applicable from the assessment Year 2026-27 as per the budget announcement made on February 1, 2025.
The Income Tax Act of 1961 has been in operation for more than sixty years, comprising 298 sections and 23 chapters. With each Union Budget bringing new amendments and revisions, the existing income tax legislation has evolved into a highly intricate framework.
She said, “Over the past 10 years, our government has implemented several reforms for the convenience of taxpayers, such as faceless assessment, taxpayers charter, faster returns, almost 99 per cent returns being on self assessment, and Vivad se Vishwas scheme. Continuing these efforts, I reaffirm the commitment of the tax department to “trust first, scrutinise later”. I also propose to introduce the new income-tax bill next week.”