Union Cabinet approves new income-tax Bill; law set to be simpler

In addition, the official stated that in the new income tax bill, authorities have not been given excessive powers

The Union Cabinet on Friday approved the new income-tax Bill, which is likely to be tabled in Parliament next week. The Bill is expected to reduce the number of sections by almost a third, according to a government official.

 

“We have tried to reduce sections by 25-30 per cent to make the law simpler and more concise. We have removed proviso and explanations and have halved the word count,” the official said.  

The authorities have not been given excessive power, the official explained. “There is no excessive case of delegation. Substantive power relating to quantification of income and levy of rates remain with Parliament. Every single rupee has to be collected after Parliamentary approval, this is the fundamental principle of taxation and it can never change. However, some provisions could be made more compact by shifting the procedural details into rules,” he added.  

A second official said the focus was on simplification, clarity, and ease of understanding. “It aims to use lucid language, active voice, and shorter sentences while eliminating redundancy and complex explanations.” 

The tax department wants the Bill to go for public consultation to ensure transparency and gather feedback from taxpayers, businesses, and experts. “Consulting stakeholders also reduces the chances of ambiguities or legal disputes in the future, ensuring a smoother transition to the new tax regime,” the first official said. 

  In an interview with Business Standard a day after the Budget, Finance Minister Nirmala Sitharaman had said the Bill would be referred to the Standing Committee on Finance after it is tabled in Parliament. The Standing Committee would initiate a consultation process.  

Over 100 officers contributed to drafting of the new Bill: Officials

 

Sitharaman had said the Bill also aimed to resolve interpretation-related issues by various courts, arising out of the ambiguity in language at present.

  Commenting on the Bill, Akhilesh Ranjan, former member of the Central Board of Direct Taxes (CBDT) and adviser at PwC, said the new Bill was expected to combine sections dealing with the same issue. “Cross-referencing is likely to be avoided and each chapter could have its own set of definitions. This should make the law more comprehensible and easier to comply with," he added.

  According to government officials, more than 100 officers contributed to drafting of the new Bill, bringing in their extensive experience in tax administration. 

  "Tax laws are complex, and simplifying them was a Herculean task. If this Bill achieves true simplification within such a short timeframe, the credit goes to the government,’’ the first official said. The drafting had to be completed in just six months, driven by a strong political push to make tax laws simpler for the common people, it is learnt. Many officers from outside Delhi were relocated to the capital solely for this task, working late into the night to finish the project, according to officials in the know.    

What the Bill says  

- Parliament is likely to keep important powers with no extra authority given to tax officials. 

- The Bill aims for clear language to help taxpayers understand and follow the rules easily. 

- The Bill aims to combine related sections to make the tax laws easier to navigate and comply with