Winning Bizness Desk

Mumbai. Finance Minister Nirmala Sitharaman introduced the new Income Tax Bill in Parliament on Thursday, which has now been passed by the Lok Sabha. Here’s an overview of the key aspects of this bill.

The current Income Tax Act was passed in 1961 and came into effect on April 1, 1962. Over the years, it has undergone more than 4,000 amendments across 65 instances under various Finance Acts. These frequent modifications led to complexities, making the law difficult to understand and comply with.

Extensive Efforts in Drafting the New Bill

To simplify the Income Tax Bill and remove unnecessary provisions, the government received 20,976 online suggestions from stakeholders. These were thoroughly analyzed, and consultations were held with international experts, including tax departments of Australia and the UK, which had undertaken similar tax law reforms in the past. Additionally, documents prepared in 2009 and 2019 on this subject were studied. A committee of around 150 officers from the Income Tax Department dedicated over 60,000 hours to finalize the new bill.

Key Benefits for the Salaried Class

The new bill consolidates all salary-related provisions in one place to make income tax return filing easier. Earlier, exemptions under Section 10—such as gratuity, leave encashment, and pension computation—were scattered across different sections. Now, they have been grouped under a single "Salary Chapter," reducing the need for cross-referencing multiple chapters.

Next Steps After the Bill’s Introduction

After being passed by both Houses of Parliament, the bill will become law following the President’s approval. Once enacted, new rules will be notified, and necessary software updates will be developed to accommodate the changes. Additionally, an official section-wise mapping of old and new provisions will be available on the Income Tax Department’s website. The bill also introduces the term "Tax Year" in place of "Previous Year" and "Assessment Year" to make tax calculations more straightforward. Furthermore, TDS and TCS provisions have been simplified using tabular formats, distinguishing between resident Indians, NRIs, and cases where tax deduction at source is not required. The bill includes a "Repeal and Savings" clause to ensure a smooth transition, allowing both old and new provisions to remain in effect for a year to protect existing rights and obligations.