Lok Sabha Question No. 1803 (UNSTARRED), answered on 2025-03-10
Subject: Simplification of Income Tax Bill, 2025
Ministry: FINANCE
Asked by: Shri Mukeshkumar Chandrakaant Dalal

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA

## UNSTARRED QUESTION NO. 1803

TO BE ANSWERED ON MONDAY, MARCH 10, 2025/PHALGUNA 19, 1946 (SAKA)

## SIMPLIFICATION OF INCOME TAX BILL, 2025

## 1803. SHRI MUKESHKUMAR CHANDRAKAANT DALAL :

Will the Minister of FINANCE be pleased to state:

- (a) the  manner  in  which  the  Government  plans  to  ensure  that  the  simplifications  do  not lead to unintended ambiguities or legal challenges in interpretation;
- (b) whether the Bill impacts revenue collection and taxpayer behaviour;
- (c) whether the simplification exercise align with the broader objectives of tax transparency, ease of doing business and digitisation efforts under faceless assessment and e-filing initiatives, if so, the details thereof; and
- (d) whether the reorganisation of sections require businesses and professionals to undergo new compliance training?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

(a) & (b) The Government announced a comprehensive review of the Income-tax Act, 1961 (the  Act).  As  a  consequence  of  the  said  review,  the  Income-tax  Bill,  2025  (Bill  No.  24  of 2025)  has  been  introduced  in  the  Lok  Sabha  on  13.02.2025  and  referred  to  the  Select Committee of Lok Sabha for examination.

The  purpose  behind  the  introduction  of  the  Income-tax  Bill  was  to  simplify  the  existing Income-tax  Act,  1961  by  making  it  concise,  lucid,  easy  to  read  and  understand.  The simplification exercise was guided by three core principles: -

1. Textual and structural simplification for improved clarity and coherence.
2. No major tax policy changes to ensure continuity and certainty.
3. No modifications of tax rates, preserving predictability for taxpayers

For this purpose, a three-pronged approach was adopted: -

1. Eliminating intricate language to enhance readability.
2. Removing redundant and repetitive provisions for better navigation.
3. Reorganizing sections logically to facilitate ease of reference.

While undertaking the simplification exercise, conscious attempt has been made to minimise the  scope  of  unintended  ambiguity,  leading  to  fresh  interpretations  and  litigation.  For  this purpose, the following measures have been taken among others:

- a. Key words/phrases, especially where courts have given rulings, have been retained with  minimal  modifications,  and  language  has  been  simplified  by  use  of  short sentences.
- b. Provisions  have  been  made  clear  to  minimize  scope  for  multiple  interpretations. The provisos and explanations have been removed and simplified content has been placed as sub-sections and clauses.
- c. Formulae and tables have been used to enhance clarity.
- d. Provisions involving same issues and definitions, which were present in different chapters in the existing Act have been consolidated.

The Income-tax Bill, 2025, thus reflects the Government's commitment to enhance ease of doing business by providing a tax framework that is simple, clear and unambiguous.

While the exercise of simplification carried out may not have a direct or immediate effect on revenue collection per se, all amendments proposed up to Finance Bill 2025 have been duly incorporated  in  the  new  Income  tax  bill  2025.  Therefore,  the  Bill  stands  updated  from  a policy perspective. Further, it is expected that the changes proposed in the structure of the Bill, and efforts undertaken to make the provisions in the Bill concise, lucid, easy to read and understand (as noted above) shall act as a nudge towards increased taxpayer compliance.

(c) The simplification exercise aims to create a statute of taxation that is accessible to and comprehended by not just tax professionals but informed citizens as well.  Ease of paying taxes is an important pillar of ease of doing business. The approach of using clear and lucid language, increased use of tabular format for representation of information and mathematical formulas for easier understanding aims to increase tax certainty, improve ease of paying taxes and enhance ease of doing business. The existing technological reforms undertaken by the department including initiatives like pre-filled ITRs, Annual Information Statement, faceless proceedings, e-filing of various forms etc. are all retained in the Bill.

(d) Reorganisation of sections in the Income-tax Bill, 2025 has been done to facilitate ease of reference and provide a legal framework for implementing direct tax policy that is simple, clear and unambiguous. This reorganisation of sections is not expected to require businesses and professionals  to  undergo  any  new  compliance  training.  In  fact,  it  is  expected  to  make compliance easier for the ordinary tax-payer.

Further,  with  a  view  to  ease  understanding  of  the  new  Bill,  the  Notes  on  clauses  to  the Income-tax Bill, 2025 explain in detail the various provisions contained in the Bill.

In  addition  to  the  above,  utility  to  check  section  of  Income-tax  Act,  1961  (as  amended  by Finance (No. 2) Act, 2024) vis-a-vis corresponding Clause of the Income-tax Bill, 2025, an Income-tax Bill, 2025 navigator and Frequently Asked Questions (FAQs) for the Income-tax Bill,  2025  have  been  made  available  in  the  public  domain,  and  have  been  appreciated  and well-received.

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