The Union Cabinet has approved a landmark new Income Tax Bill that will replace the existing Income Tax Act of 1961. The approval, granted on Friday, marks a significant step toward modernising and simplifying India’s taxation system. The new legislation aims to make tax laws more accessible to the average taxpayer through simplified legal language and streamlined provisions. No New Tax Burden, Confirms Government According to the Finance Secretary’s statement on Thursday, cited by ET, the reformed tax framework won’t introduce additional taxes. Instead, the focus remains on reducing legal complexities and easing compliance procedures for taxpayers. The new legislation is designed to be approximately 50% shorter than its predecessor, featuring concise sentences and more straightforward explanations. Implementation Timeline The new tax system is scheduled to take effect from the financial year 2025-26, with its first application in the assessment year 2026-27. Finance Minister Nirmala Sitharaman initially announced the bill during her budget presentation on February 1, setting the stage for this comprehensive reform. Key Reform Objectives The legislation aims to create a more taxpayer-friendly environment by potentially introducing reduced penalties for certain offences. A primary goal is to minimise tax-related litigation, addressing one of the significant challenges in the current system. Simpler Compliance Framework According to CA Ashish Niraj, the bill aims to simplify tax laws drafted six decades ago with some amendments. However, they will now be easy to understand in the current era. This bill will be less complex and improve the tax system without imposing any new taxes. Additionally, he says, Compliance will be simpler. When old I-T laws were drafted, automation was not there; now, law sections will be easy to comply with. Filing and processing will be easier “Furthermore, assessments and litigation will be smooth, as FM said at the time of the budget. Sections and clauses will be almost half than earlier. Old useless provisions, which were not relevant, will be removed.” Streamlining and Modernization The new legislation is expected to rationalise withholding tax provisions and address current anti-abuse measures that sometimes affect legitimate transactions. The new law aims to create a more precise and objective tax framework by removing obsolete and redundant provisions, reducing the scope for multiple interpretations and potential disputes.Original Article