Simplified I-T Bill aims for tax certainty, minimising litigation

The simplified Income Tax Bill, which is half the size of the 1961 Income Tax Act, seeks to achieve tax certainty by minimising the scope of litigation and fresh interpretation, the Income Tax department said on Thursday.

The new Bill has a word count of 2.6 lakh, lower than 5.12 lakh in the I-T Act. The number of sections is 536, as against 819 effective sections in the existing law. The number of chapters has also been halved to 23 from 47, according to the FAQs issued by the I-T department. The Income Tax Bill 2025, has 57 tables, compared to 18 in the existing Act and removed 1,200 provisos and 900 explanations.

Weeding out intricate language, redundancies

• Concerns over accumulation of amendments, intricate

  language, redundancies and heavy structure of the I-T Act made the government come out with a new simplified law

• Consultations were held with various stakeholders, including Australia and the UK where tax laws were rewritten in the past
• 150 I-T officials were involved in drafting the Income Tax Bill, 2025, and more than 60,000 man hours were dedicated in its drafting

Provisions relating to exemptions, and TDS/TCS have been made crispier in the Bill by putting them in a tabular format, while the chapter for not-for-profit organisations has been made comprehensive with use of plain language. As a result of this, the word count has come down by 34,547.

"While undertaking simplification exercise, a conscious attempt has been made to minimise the scope of litigation and fresh interpretations," it said to a query on whether principles of Tax Certainty were followed in drafting of the new Bill.

Key words, especially where courts have given rulings, have been retained with minimal modifications. Provisions have been made clear to minimise scope of multiple interpretations and tax certainty has been ensured with regard to international taxation.

The Bill consolidated provisions pertaining to salary at one place for ease of understanding so that the taxpayer does not have to refer to separate chapters for filing return of income. Deductions, like gratuity, leave encashment and compensation on VRS are now part of the salary chapter itself.