Income-Tax Bill, 2025

Published On:

The Income-Tax Bill, 2025, aims to simplify tax laws but largely retains existing complexities and ambiguities, offering little fundamental change.

The Income-Tax Bill, 2025, introduced in Parliament, is set to replace the 1961 Act, promising clarity and a predictable tax environment. However, despite minor structural revisions, it largely retains the complexities and ambiguities of the existing law. Some areas even grant broader, authoritarian powers to authorities.

Efforts to use plain language and remove redundancies are evident, yet significant issues remain. The law continues to rely on phrases like “notwithstanding anything contained to the contrary,” which contribute to confusion. While some outdated clauses have been omitted, much could have been achieved through simpler amendments rather than an overhaul.

The Bill’s drafting reflects a broader policy of tax stability, avoiding major fiscal changes. However, the attempt to consolidate rules into tables and schedules does not necessarily eliminate litigation risks. Cross-references to existing laws further complicate interpretation.

Cosmetic adjustments, such as redefining "income" and “virtual digital asset,” create ambiguity rather than clarity. The power of tax authorities has been expanded into areas like digital communications, allowing access to emails and storage systems. This raises concerns about privacy and potential misuse.

Despite its intent, the Bill neither simplifies taxation nor resolves legal uncertainties. The absence of clear judicial oversight leaves room for misuse, making the overhaul largely ineffective in achieving its stated goals.