Mint Explainer | New income tax bill: Why was there a need for a new legislation?

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Subscribe to enjoy similar stories. The Income-Tax Bill 2025 was introduced in Lok Sabha on 13 February to replace the existing Act. This bill does not propose radical changes like the Draft Direct Taxes Code Bill of 2009, nor does it introduce any new taxes or spring any surprises.

It essentially retains the existing Act in substance, simplified for the ease of reading and interpretation, with all related sections regrouped and redundant ones removed. As a result, the Bill is about half the size of the Income-Tax Act, 1961 (I-T Act), as subsections and provisos have been deleted and the archaic language replaced with contemporary terms such as “tax year" for “previous year". India is among the many countries trying to simplify its tax laws to reduce conflicts in interpretation which often lead to litigations, align terms with those used in tax treaties and make the law comparable with those of other jurisdictions.

It has mostly succeeded in simplifying the law, though some ambiguities remain. One such ambiguity pertains to the eligibility to claim tax refunds due to what appears to be inconsistencies in two separate sections. Tax professionals may find other conflicts in the Bill as they analyse it further.

Any inconsistencies identified are expected to be addressed before the Bill is enacted into law. The Bill has been referred to a select committee of Parliament for review, and its recommendations are expected before the monsoon session. The Bill is expected to be passed by both houses of Parliament, assented by the President before the end of the current financial year and implemented as law from April 2026.