A crispier and simplified Earnings Tax Invoice 2025, having 536 sections, and 23 chapters working into 622 pages, is more likely to be launched within the Lok Sabha on Thursday (February 13, 2025).
The Invoice as soon as enacted will substitute six-decade outdated Earnings Tax Act 1961, which over time turned bulkier and sophisticated with amendments.
The proposed legislation replaces the time period ‘earlier yr’ as talked about within the Earnings Tax Act, 1961 with ‘tax yr’. Additionally, the idea of evaluation yr has been executed away with.
At present, for revenue earned within the earlier yr (say 2023-24), tax is paid in evaluation yr (say 2024-25). This earlier yr and evaluation yr idea has been eliminated and solely tax yr underneath the simplified invoice has been introduced in.
The Earnings Tax Invoice, 2025 includes 536 sections, increased than 298 sections of the present Earnings-Tax Act, 1961. The prevailing legislation has 14 schedules which is able to enhance to 16 within the new laws.
Nevertheless, the variety of chapters have been retained at 23. The variety of pages has been decreased considerably to 622, virtually half of the present voluminous Act which incorporates amendments made during the last six a long time.
When the Earnings Tax Act, 1961, was introduced in, it had 880 pages.
“This enhance in sections displays a extra structured method to tax administration, incorporating fashionable compliance mechanisms, digital governance, and streamlined provisions for companies and people. The brand new legislation introduces 16 schedules and 23 chapters,” AMRG & Associates Senior Accomplice Rajat Mohan stated.
As per the proposed legislation, clearer tax remedy on inventory choices (ESOPs) have been included for decreased tax disputes and consists of judicial pronouncements of the final 60 years for extra readability.
“A key departure from the Earnings-Tax Act, 1961, is that beforehand, the Earnings Tax Division needed to method Parliament for numerous procedural issues, tax schemes, and compliance frameworks. Now, CBDT has been empowered to introduce such schemes independently, considerably decreasing bureaucratic delays and making tax governance extra dynamic,” he stated.
As per new legislation, the CBDT can now body tax administration guidelines, introduce compliance measures, and implement digital tax monitoring programs with out requiring frequent legislative amendments as per the Clause 533.
After introduction, the invoice is more likely to be despatched to a parliamentary standing committee for scrutiny.
Finance Minister Nirmala Sitharaman had introduced in Price range 2025-26 that the brand new tax invoice will probably be launched through the ongoing session of Parliament.
Ms. Sitharaman had first introduced a complete overview of the Earnings-tax Act, 1961 in July 2024 Price range.
The CBDT had arrange an inside committee to supervise the overview and make the Act concise, clear, and simple to know, which is able to cut back disputes, litigations, and supply larger tax certainty to taxpayers. Additionally, 22 specialised sub-committees have been established to overview the assorted features of the Earnings Tax Act.
Public inputs and solutions have been invited in 4 classes: simplification of language, litigation discount, compliance discount, and redundant/out of date provisions.
The Earnings Tax Division has acquired 6,500 solutions from stakeholders on overview of the Earnings Tax Act.
Printed – February 12, 2025 02:44 pm IST
