Simple language, lucid, says FM as Parliament passes Income Tax Bill, 2025

Parliament on Tuesday passed the Income Tax Bill, 2025, with the Rajya Sabha returning the legislation to the Lok Sabha by voice vote. The bill was passed in the Lok Sabha on Monday, and will replace the Income Tax Act, 1961.

 

Explaining the rationale for the new law, Finance Minister Nirmala Sitharaman said, “Some parts of the Income Tax Act, 1961, have become outdated and hence a new legislation was needed.” She added that the aim of bringing in a new law is for simplifying the language and lucidity which is required for understanding.

 

"By removing redundant provisions and archaic language, we have reduced the number of Sections from 819 to just 536.  We have cut the number of Chapters from 47 to 23. The number of words have been reduced from 5.12 lakhs to 2.6 lakhs," she added

 

 

Opposition members staged a walkout in the Rajya Sabha during the discussion, mirroring their protest in the Lok Sabha on Monday.

 

The minister criticised the Opposition for the same, saying, “I am shocked that the Opposition doesn't want to participate. Opposition had agreed in the Business Advisory Committee to debate in the Lok Sabha & Rajya Sabha."

 

She also introduced the Taxation Laws (Amendment) Bill, 2025, in the upper house.

 

 

The revised legislation adopts most of the recommendations made by the Select Committee led by Lok Sabha member Baijayant Panda. A key change is relief from the alternative minimum tax (AMT) for partnership firms and limited liability partnerships (LLPs).

 

The AMT, set at 18.5 per cent plus cess and surcharge for non-corporate taxpayers, is designed to prevent high earners from eliminating their tax liability through exemptions. LLPs with only long-term capital gains are otherwise taxed at 12.5 per cent.

 

In its earlier draft, the Bill had left out a crucial reference to Chapter VI-A deductions in the AMT provisions for LLPs. Without this, even LLPs earning solely LTCG taxed at 12.5 per cent would have faced the higher AMT rate. The updated draft restores this reference in Clause 206, ensuring AMT is triggered only when total income is reduced by such deductions, in line with the original intent.