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Considering that the timeline ends in January, it was expected that the amended Income Tax Bill could be brought in Budget session
The Income-Tax Act of 1961 has its origins in 1922 and, in its current form, contains 298 sections and 23 chapters, along with various provisions. (Representative image)
The Finance Ministry is reportedly unlikely to introduce the new Income-Tax Bill during the Budget 2025 session of Parliament. Finance Minister Nirmala Sitharaman announced a review of the Income-Tax Act during her budget presentation in July 2024.
According to a report by Business Standard, the internal committee led by Chief Income-Tax Commissioner V.K. Gupta, tasked with reviewing the existing Income-Tax Act, is expected to submit its report before the Budget is presented on February 1, 2025.
“The Bill is unlikely to be enacted immediately during the Budget session. Based on the V K Gupta committee report, the legislation will be drafted with the help of the law ministry. After the draft Bill is ready, it will be referred to the Standing Committee on Finance for further scrutiny and feedback, an official told BS.
Considering that the six-month timeline ends in January 2025, it was widely expected that the amended Income Tax Act could be brought in the Budget session of Parliament.
The review committee tasked with examining the Income-Tax Act is not expected to propose changes to tax rates. Instead, its focus remains on simplifying the legislation to make it more concise, user-friendly, and accessible, according to a recent report.
A senior government official stated that the committee aims to complete its review by submitting all 23 reports—each addressing a chapter of the 1961 Income-Tax Act—by mid-December.
“The committee is reviewing each section of the Act to simplify it, make it concise, and easier for taxpayers to understand. However, no rate changes will be suggested,” the official emphasised.
The Income-Tax Act of 1961 has its origins in 1922 and, in its current form, contains 298 sections and 23 chapters, along with various provisions.
So far, the committee has submitted eight reports to the Central Board of Direct Taxes (CBDT), while sub-committees are working intensively to finalise the remaining drafts. Key areas under review include:
- Compliance
- Exemptions under Section 10 (e.g., house rent allowance and leave travel allowance)
- Income from trusts (Sections 11–13)
- Penalty provisions
- Redundant provisions
- TDS/TCS rules
With over 80 officials involved in the process, the committee has also launched an online portal to gather public suggestions. This initiative aims to make the Income Tax Act more comprehensible and accessible for taxpayers.
What is the Income-Tax Act of 1961?
The Income-Tax Act of 1961 is the cornerstone of India’s taxation framework. It outlines the rules, procedures, and regulations for the imposition, collection, and administration of income tax across the country.
The Act covers several key areas, including:
- Charge of Income Tax: Imposes taxes on the total income of individuals, companies, and other entities.
- Heads of Income: Classifies income into five categories—salaries, house property, business or profession, capital gains, and other sources.
- Tax Rates: Specifies tax rates based on income levels and taxpayer categories.
- Deductions and Exemptions: Provides deductions and exemptions to reduce taxable income.
- Assessment and Collection: Details procedures for filing returns, assessment, and tax collection.
- Penalties and Interest: Enforces penalties and interest charges for non-compliance.
This comprehensive legislation forms the foundation of India’s income tax system and ensures efficient tax administration.
