New Delhi, Feb 13 The Income-Tax Bill, 2025 tabled in Parliament on Thursday, marks a significant step toward simplifying the language and structure of the Income-tax Act, 1961 based on global best practices, according to a statement issued by the Finance Ministry.
The review has led to a substantial reduction in the Act's volume, making it more streamlined and navigable. The total number of words in the new Income Tax Bill has been reduced to 259,676 in the new Income Tax Bill from a massive 512,535 words in the existing Income Tax Act, 1961. This close to 50 per cent cut has resulted in a reduction of 252,859 words, the statement said.
Accordingly, the number of chapters in the new Income Tax Bill has come down to 23 from 47 in the existing Income Tax Act, 1961. Similarly, the number of sections has been cut to 536 from 819 earlier which has resulted in removing as many as 283 sections, the statement explained.
This massive reduction has taken place with the simplification of language, making the law more accessible while the consolidation of amendments has reduced fragmentation.
There has also been a structural rationalisation through tables and formulae for improved readability. Besides, the preservation of existing taxation principles has ensured continuity while enhancing usability, the statement said.
Consultations were held with industry experts and tax professionals and simplification models from Australia and the UK were studied for best practices.
The simplification exercise was guided by three core principles which include textual and structural simplification for improved clarity and coherence, ensuring continuity and certainty with no major tax policy changes and no modifications of tax rates to preserve predictability for taxpayers, the finance ministry said.
A three-pronged approach was adopted with a focus on eliminating intricate language to enhance readability, removing redundant and repetitive provisions for better navigation and reorganising sections logically to facilitate ease of reference, according to the statement,
The government also ensured widespread stakeholder engagement, consulting taxpayers, businesses, industry associations, and professional bodies. Out of 20,976 online suggestions received, relevant suggestions were examined and incorporated, where feasible.
The Income-tax Bill, 2025 reflects the Government's commitment to enhancing ease of doing business by providing a tax framework that is simple and clear, the statement added.
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