Budget 2025: New Income Tax Act by FM Nirmala Sitharaman

Budget 2025: New Income Tax Act by FM Nirmala Sitharaman

Budget 2025: Finance Minister Nirmala Sitharaman, in the Union Budget 2024, had proposed to revamp the Income Tax Act, 1961, to make it concise and easier to understand. It is expected that in the upcoming budget session on February 1, a new Income Tax Act may be proposed.

The government may introduce the certain changes in the Income Tax Actin the Union Budget 2025, Bloomberg reported, citing people familiar with the matter.

In budget 2024, Nirmala Sitharaman announced a comprehensive review of the Income Tax Act, 1961, within six months.

“The new Income Tax law will be introduced in the Budget session of Parliament. It will be a new law and not an amendment to the existing Act. Currently, the draft law is being vetted by the law ministry and it is likely to be brought in Parliament in the second half of the Budget session,” reported PTI.

The government has received more than 6,500 suggestions from stakeholders, and 22 specialised committees are reviewing various aspects of the Act. The new Income Tax Act will aim to modernize the tax laws, reduce the bureaucratic burden on taxpayers and boost compliance. Tax disputes have more than doubled to 10.5 trillion rupees ($123 billion) in the decade till the fiscal year ended March 2023.

The Income Tax Act, 1961 is regarding the imposition of direct taxes such as personal income tax, corporate tax, securities transaction tax, and gift and wealth tax. Currently, the Act has about 298 sections and 23 chapters. The government aims to cut down the volume of the tax act by nearly 60% to improve compliance, PTI reported.

Budget 2025: Here’s What Nirmala Sitharaman May Announce for Individual Taxpayers