The new Bill also brings cryptocurrencies under the capital assets’ umbrella. It will enable tax authorities to call for information from “virtual digital space”, such as online investments and trading accounts etc.
Feb 17, 2025 07:04 IST First published on: Feb 17, 2025 at 07:04 IST
The recently presented Budget for 2025-26 will go down as one that provided India’s income tax payers — meagre as their number is, relative to the size of the overall population — a massive relief, with the government taking a hit of Rs 1 lakh crore in revenues foregone. But an arguably more substantive move — an economic and regulatory reform as well as an initiative towards improved governance — is the introduction of the new Income Tax Bill in the ongoing Budget session of Parliament. The new Bill, which is now being scrutinised by a select committee of Lok Sabha, intends to contemporise as well as simplify the existing statute that dates back to 1961. It is in line with the Narendra Modi government’s move to abolish over 1,500 obsolete laws while updating and amending others.
The new Bill is just half the length of the existing law as it cuts the total chapters from 47 to 23, even as it has more tables, sections and schedules. This has been made possible by omitting outdated provisions, restructuring related portions, and simplifying the language. For instance, now there will be a single and separate schedule dealing with all the exemptions applicable to non-residents; as such, a taxpayer will find it easier to read the law. Language has been improved with a view to prevent misinterpretation. For example, “notwithstanding” has been replaced by “irrespective” at several places, and “deemed”, which often led to litigation, has been replaced by “treated” in key places. Perhaps the most eye-catching change that will resonate the most with the taxpayer is the dropping of the phrase (and concept of) “assessment year” since it routinely created confusion, replacing it with the concept of “tax year”. The new Bill also brings cryptocurrencies under the capital assets’ umbrella. It will enable tax authorities to call for information from “virtual digital space”, such as online investments and trading accounts etc.
Story continues below this ad
This new Bill is not as substantive a change as the Bharatiya Nyaya Sanhita replacing the Bharatiya Danda Sanhita, the original intent of the Bill was only to make the Act “concise, lucid, easy to read and understand”. But given that complicated laws are difficult to read and easy to misinterpret, they lead to numerous and unending litigations and do more harm to the ease of doing business and ease of everyday living than high levels of taxation per se. The simplification has been done carefully and in a manner that won’t upend the existing jurisprudence — something that could have led to more litigation.
