New income tax law simplifies language, retains existing rates: Nirmala Sitharaman in Rajya Sabha

Finance Minister Nirmala Sitharaman on Tuesday told the Rajya Sabha that the central government has fulfilled its July 2024 budget commitment by simplifying tax provisions and related rules while replying to the discussion on The Income-Tax Bill, 2025 and The Taxation Laws (Amendment) Bill, 2025.

Finance Minister Nirmala Sitharaman introduced the two money bills -- The Income Tax Bill, 2025, and The Taxation Laws (Amendment) Bill, 2025. The Rajya Sabha returned the legislation with a voice vote to the lower house.

The Income Tax Bill will replace the Income Tax Act, 1961. Explaining the reasons for bringing the new income tax law, Sitharaman said some parts of the Income Tax Act, 1961, have become outdated and hence a new legislation was needed.

She stressed that the new income tax law aims to make the language simple and does not introduce any new rate.

Nirmal Sitharaman said,"1961 Act had total of 819 sections, they have come down to 536. Number of chapters was 47 and we have reduced to 23. For first time in this Act, we have introduced 39 new tables & 40 new formulae to replace textual narration, making it easier for people to understand."

VIDEO | "New income tax law aims to make language simple. No new rate is being introduced," says Finance Minister Nirmala Sitharaman in Rajya Sabha.

(Source - Third party) pic.twitter.com/M9IeWvX9u9 — Press Trust of India (@PTI_News) August 12, 2025

"The largely dense and complex structure of the Income Tax Act, 1961, resulted in various interpretations, and several avoidable disputes kept mounting, not so much because of the rate, but because of the language. We were subjected to too many litigations. The density and complexity of the Act, along with the verbose way it was written over the decades, with different styles dominating, made the Act very, very tedious for anyone to use," Nirmala Sitharaman further said.

Finance Minister Nirmala Sitharaman also said, "Drafting of the new Income Tax law involved 75,000 person hours.The Income Tax department worked very honestly and kept reviewing and correcting."