The New Income Tax Bill: Simplifying for Digital Era

The Income Tax Bill 2025, introduced in Parliament and undergoing scrutiny by the Select Committee, is slated for discussion in the monsoon session. It modernizes tax regulations by incorporating digital data, minimizing litigation, and reducing the bill's complexity. Key updates include powers for digital searches and reduced sections.

The Finance Minister, Nirmala Sitharaman, announced that the new Income Tax Bill 2025, currently under review by the Select Committee, will be up for discussion during the monsoon session of Parliament. This session traditionally occurs between July and August. The bill, introduced earlier in February, aims to update the existing tax code by integrating digital record considerations and simplifying overall tax legislation.

This update to the 1961 Income Tax Act addresses digital gaps, granting tax officers authority to bypass digital access restrictions during investigations. The bill covers virtual digital spaces, including cloud computing and online financial accounts, thereby curbing legal ambiguities frequently contested in courts.

Aimed at curtailing litigation and clarifying tax regulations, the new bill reduces its word count to 2.6 lakh from 5.12 lakh and streamlines sections to 536 from 819, cutting chapters nearly in half. It also expands the number of tables from 18 to 57 while eliminating numerous provisos and explanations, making tax management more accessible.

(With inputs from agencies.)