Union Govt to approve new Income Tax Bill tomorrow: Everything to know

The Union Cabinet is expected to approve a new Income Tax Bill on Friday (Feb 7), setting the stage for its introduction in the Lok Sabha by Monday. This bill is a key component of a larger effort to overhaul India's taxation system.

The proposed legislation, which is often referred to as the Direct Tax Code, is aimed at overhauling the existing tax structure, making it more streamlined and transparent.

While 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.

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The bill is likely to be referred to the Standing Committee for further discussion and refinement of its provisions.

Objective of bringing new tax bill

The government has already made it clear that the bill will focus on simplifying tax laws, removing ambiguities, and ensuring ease of compliance for taxpayers rather than introducing any new taxes.

Several amendments are expected to be introduced to the existing law, with a focus on reducing litigation. One of the provisions could include a reduction in penalties for certain offences, making the tax framework less punitive and more taxpayer-friendly.

The new income tax law will be in simple language, which will help taxpayers and tax experts understand the provisions better. Also, digital processes will be promoted, which will make tax filing completely digital. This can also reduce legal disputes.

Income Tax Bill to be tabled in Parliament

As a Finance Bill, it will only be submitted to the Lok Sabha, although the Rajya Sabha can suggest amendments. Ultimately, the Lok Sabha will decide whether to accept these recommendations. This new bill aims to reform the tax system, making it more streamlined and transparent, with a focus on simplification and rationalisation of the tax filing process.

(With inputs from agencies)