Sunil Badala, Head of Tax, KPMG in India
The Income-tax Bill, of 2025, largely aligns with the existing provisions of the Income-tax Act, of 1961. At first glance, it aims to simplify the legislation by consolidating similar provisions, eliminating obsolete sections, and presenting some information in a tabular format. This approach has reduced the word count by 45 percent and decreased the number of sections from over 800 (counting alphanumeric sections like Section 115A through Section 115WM individually) to 536 sections.
Other notable changes include the adoption of terms like “tax year” instead of “previous year,” the elimination of the assessment year concept, rephrasing “explanations” and “proviso” as sub-sections, and breaking long sentences into shorter clauses to improve readability and implementation. The Bill continues to reference certain definitions from the Income-tax Act, of 1961, and there are many cross-references between tables, which could make the reading slightly cumbersome.
Himanshu Parekh, Partner, Tax, KPMG in India on the Income Tax Bill
The new Income-tax Bill, 2025 represents a significant overhaul of India’s tax legislation, marking a pivotal shift towards simplification and modernization of the Income-tax Act of 1961 (‘the 1961 Act’). The Bill, which spans 622 pages, reduces the complexity of the 1961 Act and replaces intricate legal jargon with clear and straightforward language. Another notable aspect of the Bill is the strategic use of tables and formulas, which will help simplify the interpretation of the provisions. The Bill aims to minimize disputes and litigation while enhancing taxpayer certainty. Notably, the Bill introduces a “trust first, scrutinize later” philosophy, aligning with the government’s ideology of “minimum government and maximum governance.” Unlike the 1961 Act, the Bill empowers the CBDT to establish tax administration rules and implement digital tax monitoring systems, thereby increasing efficiency without frequent legislative changes. Scheduled to take effect on April 1, 2026, the Bill is set to foster a more transparent and taxpayer-friendly environment, representing a historic milestone in India’s tax landscape.
