Easier taxes for all? Sitharaman's new Bill promises simplicity, critics demand more

Finance Minister Nirmala Sitharaman introduces the Income Tax Bill 2025 in Lok Sabha, aiming to simplify tax laws, but faces immediate opposition and a walkout from parliament members. Promising clearer language, reduced sections, and a focus on taxpayer-friendliness, the bill seeks to replace the complex 1961 act, though debate ensues over its actual impact and potential referral to a select House committee.

Simplified Tax Laws

Finance Minister Nirmala Sitharaman tabled the Income Tax Bill 2025 in the Lok Sabha on February 13, aiming to simplify tax laws and make them more accessible to taxpayers59. The bill seeks to replace the Income Tax Act of 1961, which has become voluminous and complex due to numerous amendments over the past six decades.

Opposition and Walkout

The introduction of the bill was met with immediate opposition, with several MPs staging a walkout during the session. Objections were raised regarding the bill's increased number of sections compared to the original 1961 act and concerns that changes were merely "mechanical".

Key Features and Changes

The Income Tax Bill 2025 comprises 536 sections, 23 chapters, and 16 schedules, spanning 622 pages. While the number of sections has increased from the original 1961 act, Sitharaman emphasized that it reduces the number from the current 8199. The bill introduces the concept of a "tax year" and eliminates terms like "previous year" and "assessment year". It also removes redundant sections and aims to use simpler language, tables, and formulas to improve readability. Key provisions include clearer tax treatment for employee stock options (ESOPs) and the consolidation of TDS-related sections. The bill is expected to take effect from April 1, 2026.

Debate and Committee Referral

Despite claims of simplification, opposition members raised concerns about the bill's complexity and potential impact9. Sitharaman suggested that the bill be sent to a newly constituted Select House Committee, which will submit its report on the first day of the next session.