Union Cabinet clears new Income Tax bill, to be tabled in Parliament next week

New Delhi: In a major move, the Union Cabinet on Friday approved the new income tax bill to replace the six decades old I-T Act. The new bill seeks to make direct tax law simple to understand and not to impose any new tax burden. Compared to the old act, the new bill will not have provisos and explanations or long sentences.

The Cabinet, chaired by Prime Minister Narendra Modi, approved the New Income Tax Bill, reported PTI.

According to sources, the new income tax bill will be introduced in the Parliament next week and would be sent to Parliament's Standing Committee on Finance.

The first leg of the ongoing budget session which ends on February 13 will reconvene on March 10 and sit through April 4.

Finance Minister Nirmala Sitharaman had announced in Budget 2025-26 that the new tax bill will be introduced in the ongoing session of Parliament. She had first announced a comprehensive review of the Income-tax Act, 1961 in July 2024 Budget.

Earlier, the CBDT had set up an internal committee to oversee the review and make the Act concise, clear, and easy to understand, which will reduce disputes, litigations, and provide greater tax certainty to taxpayers. Also, 22 specialised sub-committees have been established to review the various aspects of the Income Tax Act.

Public inputs and suggestions were invited in four categories -- simplification of language, litigation reduction, compliance reduction, and redundant/obsolete provisions. As part of this, around 6,500 suggestions were received from stakeholders by the ministry.