Parliament passes new Income Tax Bill to replace six-decade-old law

Parliament passes new Income Tax Bill to replace six-decade-old law

Finance Minister Nirmala Sitharaman says it did not impose any new tax rate and only simplified the language, which was required for understanding the complex Income Tax laws.

Parliament passed a new Income Tax Bill to replace the six-decade-old Income Tax Act, 1961, that will come into force from April 1, 2026.

Piloting the Income Tax Bill, 2025 in the Rajya Sabha, Finance Minister Nirmala Sitharaman said it did not impose any new tax rate and only simplified the language, which was required for understanding the complex Income Tax laws.

The new Bill removes redundant provisions and archaic language and reduces the number of Sections from 819 in the Income Tax Act of 1961 to 536 and the number of chapters from 47 to 23.

The number of words had been reduced from 5.12 lakh to 2.6 lakh in the new Income Tax Bill, and for the first time, it introduces 39 new tables and 40 new formulas, replacing the dense text of the 1961 law to enhance clarity.

“These changes are not merely superficial; they reflect a new, simplified approach to tax administration. This leaner and more focused law is designed to make it easy to read, understand and implement,” Ms. Sitharaman said while replying to a short debate in the absence of the Opposition in the Rajya Sabha.

Along with the Income Tax Bill, 2025, the House also returned the Taxation Laws (Amendment) Bill, 2025, to the Lok Sabha that had passed these money Bills