Finance Minister Nirmala Sitharaman tabled the New Income Tax Bill in Parliament on February 13. The bill aims to cut down on clunky jargon and streamline processes. However, it has drawn only savage criticism from the opposition for obvious reasons.
Opposition wasted no time responding when Ms. Sitharaman tabled the bill in the parliament, and some members staged a walkout. At the same time, others, like Congress MP Manish Tewari and RSP's NK Premchandran, claimed that the bill became even more complicated than before. Trinamool Congress MP Saugata Roy termed the jibe “mechanical.”
The opposition raises two main concerns:
Complexity: While proponents said they have simplified the bill, members of the opposition said they still found its structure difficult to grapple with.
No More Clarity: Detractors argue that a decrease in sections does not guarantee an increase in amassing clarity.
Rushed introduction: Critics argue that the bill was rushed without enough time or discussion.
Ms. Sitharaman firmly defended the bill, countering the opposition’s claims with specific changes:
The law currently has over 800 sections, whereas the new bill contains only 536 sections.
The word count has been cut by half, making it more concise.
The bill follows five core principles, collectively termed S.I.M.P.L.E.: Streamlined structure and language, Integrated and concise, Minimised litigation, Practical and transparent, Learning and Adapt, and Efficient tax reforms.
The most significant change is the introduction of a ‘tax year’, replacing the previous financial year (FY) and accounting year (AY) distinction. Under the new system, income earned in a particular year will be taxed within the same year, streamlining the process.
The Finance Minister also added, "At that time they had 298 sections. But, as time went by, more sections were added. And, as it stands today, there are 819... from that, we're bringing it down to five."
Other notable amendments include:
The removal of outdated provisions such as fringe benefits tax.
Addition of tables for TDS, presumptive taxation, salaries, and deductions for bad debt.
While the bill restructures the tax code, certain aspects remain unchanged:
Existing tax slabs will not be altered.
Definitions established through court rulings will remain intact.
Certainty of tax provisions is maintained to ensure stability for taxpayers.
In addition to the bill, Ms. Sitharaman's Union Budget 2025 included major tax proposals:
A tax rebate increase, allowing individuals earning up to Rs 12 lakh (Rs 12.75 lakh with standard deduction) to be exempt from tax.
A new 25% tax slab for those earning between Rs 20 lakh and Rs 24 lakh.
These tax reforms have been politically significant. The BJP has credited them as a key factor in their landslide victory in the recent Delhi Assembly elections, where they won 48 out of 70 seats, marking a major turnaround from previous results.