Five Ways New Income Tax Bill Is Simpler Than Old Income Tax Act
The new income tax bill removes unwanted provisions, shortening its length by nearly half.
Finance Minister Nirmala Sitharaman introduced the Income Tax Bill 2025 in the Lok Sabha on Thursday, aiming to simplify tax laws.
Sitharaman initially planned to review the Income Tax Act of 1961 during the Budget Speech on July 23, 2024, to make the income tax act more understandable and user friendly.
Here are the five ways how the new income tax is simpler than the old income tax plan
The new income tax bill removes unwanted provisions, shortening its length by nearly half.
Unlike the Income Tax Act 1961, which used 18 tables, the new income tax bill will incorporate more than 57 tables to make it more straightforward and clearer. Instead of using provisos and explanations, it uses sub-sections and clauses, which reduces the need for cross references and potential conflicts. All relevant provisions for specific scenarios are put together to make it simpler.
Around 1,200 provisions and 900 explanations from the new income tax bill have been removed.
The 1961 act has a lot of cross references to different sections, making it hard to understand. The new bill uses a simpler system where you can refer to provisions just by mentioning the section.
A key change in the bill is the removal of the terms 'previous year' and 'assessment year'. Before 1989, taxpayers had different 12-month periods for each source of income. From April 1, 1989, the 'previous year' was aligned to the financial year for everyone. However, the 'assessment year' was still used for various processes under the Act.
