Union Cabinet Approves Income Tax Bill, Easing Tax Filing Process For Common Man

New Delhi: The Union Cabinet on Friday approved the Income Tax Bill, a move aimed at simplifying taxation for the common man. According to officials, the bill is designed to provide a more straightforward tax filing process, reducing litigation and making life easier for taxpayers. The new bill, approved by the Union Cabinet, chaired by Prime Minister Narendra Modi , will replace the six decades old Income-tax Act, 1961, making it easier to understand and reducing disputes and litigations.

According to government sources, the bill will be a game-changer for ordinary citizens, providing them with a more streamlined and efficient way to file their taxes. The sources added that the bill will help avoid a lot of litigation matters, making the tax filing process less cumbersome.

The new income tax bill is part of the government's efforts to reform the tax system, making it more taxpayer-friendly. Finance Minister Nirmala Sitharaman had announced plans to introduce a new income tax bill in her Budget speech, stating that the bill would be "clear and direct". The government aims to replace the existing Income Tax Act of 1961 with the new bill, which will have fewer long sentences, provisos, and explanations. 

Sitharaman had first announced a comprehensive review of the Income-tax Act, 1961 in 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.

The new income tax bill will be introduced in Parliament next week and will be sent to the Parliament's Standing Committee on Finance. The first leg of the ongoing budget session ends on February 13, and the session will reconvene on March 10 and sit through April 4.

Features of New Income Tax Bill

- The bill will not impose any new tax burden on taxpayers.
- It will eliminate provisos, explanations, and long sentences, making the language concise and clear.
- The bill will provide greater tax certainty to taxpayers.

The income tax department had invited public inputs and suggestions in four categories: simplification of language, litigation reduction, compliance reduction, and redundant/obsolete provisions. The department received 6,500 suggestions from stakeholders on the review of the Income Tax Act.