New Delhi, Aug 12 — The Rajya Sabha on Tuesday returned the revised Income Tax Bill, along with the Taxation Laws (Amendment) Bill, 2025, to the Lok Sabha, completing parliamentary approval. The Bill will now be sent to the President for assent, replacing the over six-decade-old Income Tax Act, 1961. Finance Minister Nirmala Sitharaman said the old law’s complexity and verbose language had led to frequent disputes and litigations.
The Income Tax (No. 2) Bill, 2025, passed in the Lok Sabha on Monday, incorporates 285 recommendations from the Parliamentary Select Committee, chaired by BJP MP Baijayant Panda. The updated law simplifies tax provisions by nearly 50 per cent, cuts legal ambiguity, and aligns with existing legislation. It aims to benefit individual taxpayers and MSMEs by reducing litigation and making compliance easier. Slabs and rates have been revised to lower the tax burden on the middle class, boosting consumption, savings, and investment.
Sitharaman said the revisions involved correcting drafting errors, aligning phrases, and ensuring accurate cross-referencing. The earlier version of the Bill was withdrawn last week to avoid confusion.
Panda said the overhaul will “turbocharge growth” by making taxes easier to understand, citing it as part of the Modi government’s wider effort to repeal or amend over 1,500 outdated laws. He highlighted that the 1961 Act had undergone more than 4,000 amendments and contained over 5 lakh words, making it unwieldy for taxpayers.
The new law is expected to reshape India’s tax landscape, improve fairness, and enhance clarity in legislation—helping sustain India’s position as the world’s fastest-growing major economy and its recent ranking as the fourth-largest economy globally.
