New Income Tax Bill might remove need for Budget for Tax Relief; says report:

New Income Tax Bill might remove need for Budget for Tax Relief; says report The new income tax bill 2025, which is expected to be approved by the Union Cabinet on Friday, will include a unique feature that would eliminate the need to wait for the budget for income tax reliefs or change the Income Tax Act, according to a report quoting two sources. Referring to the report, one of the sources stated, "Some provisions have been proposed that will allow the government to modify the limits or amounts of deductions/rebates through executive orders only." Another source, according to the report, stated that "Changes to the standard deduction could be among these provisions." On Friday, the Cabinet's first meeting following the Budget, it is expected to pass the Income Tax Bill 2025. Following Cabinet clearance, it is scheduled to be introduced in the Lok Sabha, most likely on Monday, and may be referred to the Parliamentary Standing Committee on Finance for further consideration.

Why Is the Government Bringing in a New Income Tax Bill?

The new legislation, known as the Direct Tax Code, aims to simplify the current income tax structure. It will replace the current Income Tax Act of 1961. During her Budget Speech 2025, Finance Minister Nirmala Sitharaman stated that the bill would exemplify the Nyaya philosophy that underpins Bharatiya Nyaya Sanhita. The bill repealed the Indian Penal Code of 1860 in July 2024. In her Budget Speech, she stated, "I am glad to inform this august House and the public that the new income-tax measure would carry forth the same spirit of "Nyaya." The new bill's wording will be straightforward and direct, accounting for over half of the current law's chapters and words. It will be straightforward to understand for taxpayers and tax officials, resulting in tax certainty and less litigation."

New Income Tax Bill Expectations

It is envisaged that a streamlined residency rule will be implemented, providing more clarity in determining a taxpayer's residential status. It will simplify the overall tax structure by removing complexities. It is also expected to make compliance with the income tax law easier for both taxpayers and tax officials.