Income Tax Bill Gets Cabinet Nod, To Be Introduced In Parliament Next Week, Says Report

The new Income Tax Bill, which is aimed at simplifying the laws pertaining to direct taxation, was approved by the Union Cabinet on Friday, news agency PTI reported, citing sources.

This comes after Finance Minister Nirmala Sitharaman, while presenting the 2025 Union Budget on Saturday, said the Income Tax Bill would be introduced in the coming week.

The bill was granted approval in the Cabinet meeting chaired by Prime Minister Narendra Modi, the persons privy to the development told the news agency. The legislation will be introduced in the Parliament next week, and will be subsequently sent to the Parliament's Standing Committee on Finance, they added.

The legislation, which would require clearance from the Parliament and assent from the President to be enacted as a law, aims at bringing sweeping reforms to the current Income Tax Act by making the provisions shorter and crispier.

Before the Income Tax Bill was cleared by the Cabinet, people in the know told NDTV Profit that the legislation would likely provide directions to widen the tax net, given the contraction in the tax base following the exemption limit being raised to Rs 12 lakh in the Budget.

“Given that there are far more taxpayers at the bottom of the income pyramid than at the top, this adjustment (change in slabs and structure under new tax regime) could lead to revenue leakage," one of the sources said, adding that the bill could suggest ways to bring in more taxpayers into the formal system and increase overall tax revenue.

Notably, Finance Minister Nirmala Sitharaman had announced in her previous full-year budget speech, on July 23, that the government would bring a new law to further simplify the compliance with direct taxation norms. In less than seven months, the new Income Tax Bill is set to be introduced by the government.

After presenting the Union Budget for fiscal year 2025-26 on Saturday, Sitharaman said in a press briefing that the decision to bring the new Income Tax Bill, along with increase in tax exemption limit, shows that the current government is a "responsive".

"It is a very responsive government... as a result, the income tax simplification which I announced in July is already completed... and we shall bring the bill next week. So, if we are talking of reform inclusive of taxation, the work is done," she told reporters.