Direct Tax Code: Simplifying Income Tax System and Reducing Complexity

New Income Tax Bill: Relief without Waiting for the Budget, Amendments Can Be Made Anytime

New Income Tax Bill 2025: The new Income Tax Bill, announced by the central government in the budget, is expected to be approved by the Cabinet today. One key provision in the bill allows the government to make changes to the income tax system without waiting for the budget. According to media reports, the new bill includes provisions that will grant the government the authority to amend deductions, exemptions, and the amounts through executive orders.

Changes in Standard Deductions:
The new Income Tax Bill will also grant the government the power to periodically amend the standard deductions through executive orders. The Cabinet meeting under Prime Minister Narendra Modi is likely to approve the bill today, after which it will be presented in Parliament and sent to the Parliamentary Standing Committee for further discussion.

Why the New Income Tax Bill?
This new law will be known as the ‘Direct Tax Code.’ It aims to simplify and improve the income tax structure. The new bill will replace the Income Tax Act of 1961. In her 2025 Budget speech, Finance Minister Nirmala Sitharaman stated that this bill would center around justice. She expressed her pleasure in announcing that the new Income Tax Bill will advance the concept of ‘justice.’ The bill will simplify the complexities of the current law and remove unnecessary policies and rules, making it easier for taxpayers and tax administrators to understand, thereby reducing uncertainty and disputes.

Simplifying the Tax System:
The new bill is designed to simplify the tax system, reducing complexity and making it easier for taxpayers to comply with income tax regulations.