The Income Tax Bill 2025: A milestone in simplification 

Introduction of the 'tax year' concept: The Bill introduces the concept of a 'tax year' to replace the expression 'previous year' and the expression ‘assessment year’ has also been removed from the definitions which  makes it easy for taxpayers to read and understand the document.

Simplification of tax provisions: The Bill also introduces the following changes in multiple categories:

# Eliminates the use of alphabets suffixed to previous Sections such as 10A or 35ABB. All Sections have now been renumbered, resulting in a total of 536 sections without any alphabetic suffixes.

# Long sentences appearing in the existing provisions have been split in multiple sentences and at places into multiple sub-sections.

# Consolidation of separate sections into one section, e.g. existing Sections 139A on Permanent Account Number and Section 139AA on Aadhaar have been consolidated into one Section 262 under the Bill.

# Aggregating multiple provisions relevant to an income stream at one place. For instance, incomes not forming part of total income have been organised under Schedules II to VI of the Bill, thereby reducing scattered provisions under the current law.

# Using tables to explain the regulations in simplified manner. For instance, provisions related to tax deduction in respect of a particular payment, corresponding thresholds and percentages have been tabulated in Section 393 under the Bill. Similarly, due dates for filing of returns have been meticulously organised in Section 263 of the Bill.

Elimination of obsolete sections: Obsolete sections of the existing Income-tax Act, 1961, have been eliminated, streamlining the tax code. For instance, the Bill has prudently excluded the obsolete provisions of the Fringe Benefit Tax. 

Removing ambiguity in interpretation of the law: Complex provisions are replaced with clearer language. Some of the examples of such revisions are:

* Terms like 'notwithstanding' are substituted with 'irrespective'.

* Legal expression like ‘without prejudice’ in the penalty provisions have been removed

* Deemed’ has been replaced by ‘treated’ in certain provisions to enhance the clarity of language.

* Provisos and explanations introduced by way of amendment(s) or otherwise have been replaced as sub section.

* References to other statutes are minimised, integrating pertinent extracts into primary sections for coherence. For instance, the provisions of the Wealth tax Act previously referenced in section 142A of the Income-tax Act, 1961 have been seamlessly integrated into Section 269 of the Bill.

All the above changes are likely to help in interpreting the provisions and to make them easy to read and understand. The objective of the government for simplifying the tax laws of the country should help the tax payers as well as the tax administration.

(Kamal Abrol is Partner-Price Waterhouse & Co LLP.)

Views are personal and do not represent the stand of this publication.