A transformative report on the Income Tax Bill, 2025, set to replace the 1961 Income Tax Act, will be tabled in the Lok Sabha on Monday. The 31-member Select Committee, led by BJP’s Baijayant Panda, adopted the report on July 16, offering 285 suggestions to refine the bill introduced by Finance Minister Nirmala Sitharaman on February 13.

The simplified bill, half the size of its predecessor, slashes the word count from 5.12 lakh to 2.6 lakh, reduces sections from 819 to 536, and cuts chapters from 47 to 23. With 57 tables compared to 18, and the removal of 1,200 provisos and 900 explanations, it aims to minimize litigation and enhance tax certainty. Exemptions and TDS/TCS provisions are now clearer in tabular formats, and the not-for-profit chapter uses plain language, reducing the word count by 34,547.

In a taxpayer-friendly move, the bill replaces “previous year” with “tax year,” eliminating the assessment year concept. For example, income earned in 2023-24 was taxed in the 2024-25 assessment year; now, only the tax year applies. Sitharaman highlighted “substantial changes” to simplify compliance. The bill was referred to the Select Committee for scrutiny, with its report due as the Monsoon session runs from July 21 to August 21, 2025.

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