According to PTI, the streamlined new income tax bill will consist of 23 chapters and 536 sections totaling 622 pages. On Thursday, it is probably going to be presented before the Lok Sabha. When the Bill is passed, it will take the place of the Income Tax Act of 1961, which had grown more complicated and cumbersome over time due to several revisions.
The proposed law substitutes the term "tax year" for the phrase "previous year," which appears in the Income Tax Act of 1961. According to PTI, the idea of an assessment year has also been abandoned.
Currently, taxes are paid in the assessment year (ex: 2024–25) for income produced in the prior year (ex: 2023–24). Under the simplified bill, only the tax year has been introduced, replacing the prior year and assessment year concepts.
Compared to the present Income Tax Act of 1961, which has 298 sections, the new Income Tax Bill has 536 sections. The new law will have 16 schedules, compared to the current law's 14.
Nonetheless, there are still twenty-three chapters. One significant modification is the significant reduction in page count to 622, which is nearly half of the present lengthy Act.
The Income Tax Act of 1961 was 880 pages long when it was introduced.
"A more organized approach to tax administration is shown in the expansion of sections, which includes streamlined rules for people and corporations as well as contemporary compliance procedures and digital governance. "There are 23 chapters and 16 schedules in the new law," Rajat Mohan, senior partner at AMRG & Associates, told PTI.
Additionally, the proposed rule incorporates judicial rulings from the last 60 years for greater clarity and a clearer tax approach for stock options (ESOPs) to minimize tax conflicts.
"The Income Tax Department used to have to approach Parliament for a number of procedural problems, tax schemes, and compliance frameworks. This is a significant change from the Income-Tax Act, 1961. He claimed that the CBDT now has the authority to autonomously implement such programs, greatly cutting down on bureaucratic red tape and enhancing the dynamic nature of tax governance.
As per Clause 533, the new law permits the CBDT to establish tax administration regulations, implement compliance strategies, and implement digital tax monitoring systems without the need for regular legislative modifications.
A legislative standing committee will probably review the bill after it is introduced.
In Budget 2025–2026, Finance Minister Nirmala Sitharaman declared that the new tax bill would be presented during the current Parliamentary session.
To supervise the evaluation and make the Act clear, succinct, and easy to comprehend, the CBDT established an internal committee. This will decrease disagreements and lawsuits and give taxpayers more tax certainty. 22 specialized subcommittees have also been formed to examine the many facets of the Income Tax Act.
Four areas—language simplification, litigation reduction, compliance reduction, and redundant/obsolete provisions—were open to public input and suggestions.
Stakeholders have submitted 6,500 recommendations to the income tax department for the review of the Income Tax Act.
