No need to wait for Budget for Income Tax Relief! New Income Tax Bill may have unique features, likely to get cabinet nod today

Taxpayers may not have to wait for the annual budget for tax relief.

The much-awaited New Income Tax Bill 2025 is likely to get Cabinet approval today, February 7. The Cabinet meeting is scheduled for this evening. However, more importantly, the new bill may introduce unique provisions that could eliminate the need to wait for the budget for some kind of income tax reliefs or amend the Income Tax Act, according to two sources.

Sources indicate that the Cabinet may approve the Income Tax Bill 2025 today. After Cabinet approval, it is expected to be tabled in the Lok Sabha, most likely on Monday and could be referred to the Parliamentary Standing Committee on Finance for wider consultation.

Although Income Tax Bill 2025 aims to simplify old income tax rules and introduce several taxpayer friendly provisions, but according to a source, “Some provisions have been proposed that will allow the government to modify the limits or amounts of deductions/rebates through executive orders only." This means the government may provide tax relief without amending the Income Tax Act, allowing for quick adjustments to deductions and/or rebates. In other words, taxpayers may not have to wait for the annual budget for tax relief. Another source added: “changes to the standard deduction could be among these provisions”.

Under the current Income Tax Act any changes in standard deduction, other deductions, or rebates require an amendment to the Act itself, as these amounts are explicitly mentioned in the legislation. However in the proposed Income Tax Bill 2025, these provisions may be tweaked, enabling the government to adjust tax benefits more flexibly.

Apart from tax relief provisions, the bill may introduce several structural and linguistic reforms. Such as replacing the term “Assessment Year” with “Tax Year”, eliminating British era references like “notwithstanding”, simplifying legal language by removing separate explanations and provisos, making tax clauses self-explanatory.

On February 6, Finance Secretary Tuhin Kanta Pandey stated that the new Income Tax Bill will avoid long sentences, provisos and explanations and will mark a new approach to citizen engagement, without imposing any additional tax burden. The bill, expected to be introduced in Parliament next week, will also incorporate recent changes in income tax rates, slabs, and TDS (Tax Deducted at Source) provisions, he said.

In her Budget speech, Finance Minister Nirmala Sitharaman had said, “I am happy to inform this August House and the country that the new Income Tax Bill will carry forward the same spirit of ‘Nyaya’. The new bill will be clear and direct in its text, reducing the length of the existing law by nearly half in terms of chapters and words. It will be simple to understand for taxpayers and tax administrators, ensuring tax certainty and reducing litigation.”