The New Income Tax Bill — A Step Toward Fewer Disputes!

We’ve got some big news on the tax front — the government is pushing forward with a new Income Tax Bill that could potentially change the way both individuals and corporates deal with tax disputes. But how? Well, let’s be real — no one likes tax disputes, especially when it’s messing with your books of accounts. Let’s find out.

Between the complex language in the Income Tax Act and endless legal battles, things can get pretty tangled. The new Bill, which is set to replace outdated tax laws, aims to clean up the mess by simplifying the entire process.

We’re talking clearer rules, easier-to-understand language, and quicker resolutions for tax disputes. Sounds like a step in the right direction!

So, in short — simplification is expected to be the main theme of the new Bill. That also means that no more legal jargon. Total 22 committees comprising best revenue minds tried to make the convoluted laws clearer, so we don’t get stuck in the maze of confusing terms.

While the Bill hasn't been tabled in the Parliament yet, while writing this newsletter, your author gathered what it means for you, the taxpayers.

The new Income Tax Bill is basically a revamp of the current system designed to make tax disputes easier to deal with. We all know how complicated and frustrating tax issues can get, and sometimes they drag on for years.

The aim of this Bill is to simplify things, cut down on the confusion, and help you avoid long, costly legal battles.

With simplification, resolution expected to be obviously quicker so no more waiting for ages for your case to be sorted.

We’ve got some big news on the tax front — the government is pushing forward with a new Income Tax Bill that could potentially change the way both individuals and corporates deal with tax disputes. But how? Well, let’s be real — no one likes tax disputes, especially when it’s messing with your books of accounts. Let’s find out.

Between the complex language in the Income Tax Act and endless legal battles, things can get pretty tangled. The new Bill, which is set to replace outdated tax laws, aims to clean up the mess by simplifying the entire process.

We’re talking clearer rules, easier-to-understand language, and quicker resolutions for tax disputes. Sounds like a step in the right direction!

So, in short — simplification is expected to be the main theme of the new Bill. That also means that no more legal jargon. Total 22 committees comprising best revenue minds tried to make the convoluted laws clearer, so we don’t get stuck in the maze of confusing terms.

While the Bill hasn't been tabled in the Parliament yet, while writing this newsletter, your author gathered what it means for you, the taxpayers.

The new Income Tax Bill is basically a revamp of the current system designed to make tax disputes easier to deal with. We all know how complicated and frustrating tax issues can get, and sometimes they drag on for years.

The aim of this Bill is to simplify things, cut down on the confusion, and help you avoid long, costly legal battles.

With simplification, resolution expected to be obviously quicker so no more waiting for ages for your case to be sorted.

The Bill could also see merit in fewer exemptions, fewer disputes. That is why, the Bill might propose cutting down on exemptions and deductions, making things smoother. Plus, the changes in the direct tax laws from the recent Union Budget 2025 will be included in the Bill as well.

Just to recap, Union Budget 2025 has introduced a bunch of measures to make things easier when it comes to tax compliance. For starters, they’re looking at streamlining rates for Tax Deducted at Source and Tax Collected at Source, or TDS and TCS.

One of the big changes is the increase in the TCS threshold for overseas remittances under the Liberalised Remittance Scheme. It’s now up to Rs 10 lakh, up from Rs 7 lakh earlier.

On top of that, TCS won’t apply to remittances made for educational expenses. And taxpayers can now file an updated return to fix any errors or omissions in the original tax return. Lastly, the TDS on interest income for senior citizens has also been bumped up to Rs 1 lakh from Rs 50,000.

The efforts of streamlining the process will indeed make hefty Income Tax Act a lot lighter. The Bill is expected to chop off around 3 lakh words from the current 6-lakh-word behemoth.

In the current system, there are a lot of exemptions that can be interpreted in different ways. The more exemptions, the more room there is for confusion and potential disagreements between the taxpayer and authorities. By cutting down on exemptions, the Bill hopes to create a more straightforward tax system that doesn’t leave room for a lot of interpretation, an official privy to the process told your author.

For understanding’s sake, here’s a little throwback on how we got to where we are today with direct tax reforms. The previous UPA government tried to make taxes easier by simplifying the language in the Direct Taxes Code Bill, 2010. The idea was to replace the old Income Tax Act, 1961 with a fresh approach that was clearer and more taxpayer-friendly. They even raised the limits for filing appeals before Income Tax Appellate Tribunal, High Courts, and the Supreme Court to make things smoother.

But, things didn’t go as planned. The DTC Bill lapsed after the 15th Lok Sabha was dissolved. When Arun Jaitley became Finance Minister in Narendra Modi’s first term, he decided to scrap the DTC idea entirely in the 2015-16 Budget.

Now, the third Modi government is working on simplifying tax rates and reducing exemptions. The new tax regime still has some work to do, with six different tax slabs (not including the zero percent slab), but the current dispensation has been making strides.

In 2019, they overhauled corporate tax rates, giving companies opting for fewer exemptions a better deal.

Over the years, the government has taken steps to address tax disputes. They have raised the limits for filing appeals, and even rolled out schemes like Vivad Se Vishwas (kinda amnesty scheme).

But the numbers are still going up. More money is getting tied up in tax disputes than being resolved. An official data suggests that about 5.16 lakh tax appeals are still pending at appeals.

For instance, first phase of Vivad Se Vishwas scheme helped resolve over a lakh disputes, totalling around Rs 75,788 crore. While second version managed about 33,000 taxpayers before the deadline ended in January 2025. Can't say muted response but certainly not on expected lines.

So, why exactly do we need these changes?

Sandeep Jhunjhunwala, partner-tax at Nangia Andersen LLP, says the complexity of the direct tax laws has only increased over time with multiple amendments. To keep pace with global tax trends, it’s time for a fresh approach. With a tax law that's over 60 years old, it’s clear that some serious changes are needed to make the system more efficient and predictable.

Despite previous attempts to fix tax leakages, the tweaks to the direct tax laws often end up causing more confusion, leaving taxpayers uncertain. Maybe it’s time to just scrap the old system and start fresh with a clearer tax code, he underlines.

After introducing the Bill, it will be sent to the parliamentary standing committee for scrutiny before final approval. Meanwhile, inputs will be sought from other stakeholders. The new Bill is expected to undergo extensive consultation before making it to an Act. Any timeline? Well no. But seems nothing coming before the next financial year.

The hope is that this will create a fairer environment for everyone involved — whether you’re a small business owner, an individual taxpayer, or a large corporation.

Whether you're dealing with personal income tax or corporate tax, these changes could make your life a lot easier in the long run.

So, what can you do right now? Stay informed, keep an eye out for updates on the Bill, and be ready to take advantage of the more streamlined tax system when it arrives!

That’s all for now, readers. We’ll keep you posted as the details of the new tax bill unfold. Stay tuned and here’s to a simpler, less stressful tax future!