In a significant development, Lok Sabha Speaker Om Birla has constituted a Select Committee to thoroughly examine the New Income Tax Bill, 2025. The committee, which consists of 31 members, will be chaired by Baijayant Panda, a senior Bharatiya Janata Party (BJP) leader and Kendrapara MP from Odisha. This bill, introduced in the Lok Sabha by Union Finance Minister Nirmala Sitharaman on February 13, aims to overhaul the current tax system, which has not been substantially updated in over six decades.

Committee Members and Purpose

The newly formed Select Committee will work on examining the provisions of the bill and making necessary recommendations before it is debated and passed in Parliament. The members of the committee include prominent leaders such as Dr Nishikant Dubey, BJP MP from Jharkhand, Jagadish Shettar, BJP MP from Karnataka, PP Chaudhary, BJP MP from Rajasthan, and Deepender Singh Hooda, Congress MP from Haryana, among others. Additionally, MPs from parties such as TMC (West Bengal) and NCP (Maharashtra), including Supriya Sule, are also part of the committee.

The Select Committee has been tasked with reviewing the new tax bill and providing a report that is expected to be submitted by the first day of the next session. This will help ensure a comprehensive and detailed examination of the bill before it is passed by Parliament.

The New Income Tax Bill Overview

The Income Tax Bill, 2025 is a significant move to update India’s income tax framework and simplify the current tax structure. The bill proposes to replace 298 sections and 14 schedules of the existing Income Tax Act, 1961, which has been in force for over six decades. With a 622-page document, the new bill will be streamlined into 526 sections, 23 chapters, and 16 schedules, presenting a more concise and readable version of the tax code.

One of the most notable changes in the New Income Tax Bill is the introduction of a new concept of ‘tax year’. Unlike the existing system, which uses the ‘previous year’ concept, the ‘tax year’ will be a 12-month period beginning from April 1 of every year. This change is aimed at improving clarity in tax calculations and reporting.

Key Features of the Bill

Some key features of the New Income Tax Bill, 2025 include:

• The replacing of outdated sections like those related to the Fringe Benefit Tax, which have become redundant over time.
• The bill has been designed to be reader-friendly, with simpler language, fewer provisions, and the inclusion of tables and formulae to aid comprehension.
• Taxpayer’s Charter: The Bill now includes a ‘Taxpayer’s Charter’, which clearly defines the rights and obligations of taxpayers, enhancing transparency and accountability.
• Eliminating Complexity: The bill is free from explanations or provisos, which have often made the existing tax laws complex and difficult for the common taxpayer to understand.
• Introduction of tables to help with provisions related to Tax Deducted at Source (TDS), presumptive taxation, deductions for bad debt, and more.
• The ‘previous year’ terminology has been replaced with the ‘tax year’ to make it easier for people to understand the assessment process.

The New Income Tax Bill aims to significantly streamline and modernise the tax system. It also seeks to create a simpler and more transparent system that will make tax compliance more efficient, providing both taxpayers and tax authorities a clearer framework for operations.

Impact of the Bill

The proposed changes under the New Income Tax Bill are expected to have a wide-ranging impact on individual taxpayers as well as corporate entities. The new system promises to offer a more transparent and user-friendly approach while ensuring that the taxpayer rights are well protected.

The Bill will come into effect on April 1, 2026, provided it is approved after a review by the Standing Committee and Parliament. The introduction of these reforms signals the government’s ongoing commitment to creating a modern tax system that is accessible, transparent, and fair for all Indian taxpayers.

The Select Committee's review will help shape the final version of the Bill, ensuring it addresses both legal intricacies and practical concerns. The government has expressed hope that once implemented, the new law will facilitate ease of doing business, attract investment, and encourage a greater level of tax compliance across the country.

Conclusion

The formation of a Select Committee to scrutinize the New Income Tax Bill, 2025 is an important step in ensuring that the proposed changes are well-rounded and balanced. With experts from across the political spectrum now involved in the review process, the final version of the Bill is expected to be a step towards achieving a more simplified, modern, and taxpayer-friendly tax system in India. The government remains optimistic that these changes will strengthen the country’s economy while making the tax system more accessible to individuals and businesses alike.

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