The government is likely to introduce the draft of the new Income Tax Bill on February 6, 2025, bringing significant changes to the existing tax system. The bill aims to simplify tax laws, expand the tax base, and reduce the length of the current Income Tax Act. Reports suggest that nearly 3 lakh words may be cut from the existing 6 lakh-word tax law, making it more concise and easier to understand.
According to a report by NDTV Profit, citing sources familiar with the matter, the draft bill will focus on widening the tax net after recent tax slab changes reduced the number of taxpayers under the new exemption limits.
Biggest Tax Overhaul in Years
The new income tax bill is expected to bring major reforms, making tax laws simpler and more transparent. The focus will be on reducing complexities and ensuring that more individuals come under the tax system without unnecessary burdens.
Key Changes Expected in New Income Tax Bill:
Simplification of the Income Tax Act by removing unnecessary provisions.
Expansion of the taxpayer base to compensate for the contraction due to higher exemption limits.
Improved clarity and ease of compliance for individuals and businesses.
Budget 2025-26: More Savings for Taxpayers
In the Union Budget 2025-26, Finance Minister Nirmala Sitharaman announced revised tax slabs, ensuring that more money remains in the hands of taxpayers. She stated that “about 1 crore taxpayers will directly benefit from the extended rebates and exemptions under the new tax regime.”
As per the new income tax slabs:
No income tax for individuals earning up to ₹12 lakh per year.
For salaried individuals, the tax-free limit extends to ₹12.75 lakh, considering the ₹75,000 standard deduction.
Those earning ₹8 lakh annually will save ₹30,000 due to the zero-tax liability under the new structure.
Higher Tax Rebates for Middle-Class Earners
To further ease the tax burden, the government has also introduced additional tax rebates, ensuring that more taxpayers benefit from the revised system.
Tax Rebate Details:
A maximum rebate of ₹60,000 will be available for individuals earning ₹12 lakh.
This rebate is provided in addition to the slab rate reductions, making taxation more beneficial for middle-class earners.
The goal is to make the new tax structure simpler and financially rewarding for taxpayers.
With the new Income Tax Bill likely to be introduced on February 6, all eyes are on the government’s proposed reforms. If implemented, these changes could mark one of the most significant tax reforms in recent years, making the tax system simpler, fairer and more efficient for all taxpayers.