The Income Tax Bill 2025, proposed by the central government, is expected to receive Cabinet approval today. The bill introduces groundbreaking provisions, allowing the government to revise tax exemptions and deductions at any time without waiting for the annual budget.
Why the Change?
The aim is to make tax policies more dynamic and responsive to economic conditions. This bill, part of a broader tax reform agenda, empowers the government to issue executive orders for updating deduction limits and exemptions as needed.
Major Changes Proposed:
- Standard Deduction Flexibility: The government can revise standard deduction rates at any time.
- Direct Tax Code: The bill seeks to replace the 1961 Income Tax Act with a modern framework.
- Simplified Tax System: The new code aims to reduce complexity and disputes, making compliance easier for taxpayers.
Finance Minister Nirmala Sitharaman, in her budget speech, described the bill as “a step toward tax justice.” Once approved by the Cabinet, it will be presented in Parliament and reviewed by the Parliamentary Standing Committee.
This move underscores the government’s commitment to creating a more flexible and transparent tax system.
