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Informist, Friday, Feb. 14, 2025

NEW DELHI - Lok Sabha Speaker Om Birla on Friday constituted a select committee of the Lower House of Parliament to examine the Income Tax Bill, 2025. Finance Minister Nirmala Sitharaman introduced the bill in the Lok Sabha on Thursday.

The committee comprises 31 members, including the Bharatiya Janata Party's Bhartruhari Mahtab, Naveen Jindal and Baijayant Panda, the Trinamool Congress' Mahua Moitra, the Revolutionary Socialist Party's N.K. Premachandran, and the Nationalist Congress Party's (SCP's) Supriya Sule, among others, the Lok Sabha secretariat said in a statement. The speaker appointed BJP leader Baijayant Panda as the chairperson of the committee. 

On Thursday, Sitharaman had moved a motion to refer the bill to the select committee of the Lok Sabha, which was adopted by the house with voice vote. "The terms and conditions of the select committeee will also be decided by the Speaker," she said, adding that the committee would submit a report by the first day of the next session of Parliament. 

The new bill has "substantial" changes made to the original Income Tax Act, 1961, Sitharaman had said while introducing it. Members of the Opposition, however, claimed that only "mechanical" changes had been made to the older Act, and barely any simplification could be seen.  

Announced in the full Budget for 2024-25 (Apr-Mar), the new Income Tax Bill aims to simplify the Income Tax Act, 1961, make it more lucid and easier for taxpayers to calculate taxes and file returns. Following the announcement, the Central Board of Direct Taxes set up an internal committee in October to carry out a comprehensive review of the Income Tax Act.

A copy of the proposed Income Tax Bill, 2025 shows that it has 536 sections and 23 chapters spread across 622 pages, 201 pages fewer than the older Act. The document has been shortened primarily by removing explanations. 

Proceduraly, it aims to give greater autonomy and powers to the income tax department and government to bring about policy changes and amnesty schemes for taxpayers. The government, however, will have to lay these notifications before each House of Parliament after issuing them.

The new bill also proposes to replace 'assessment year' and 'previous year' with 'tax year', making the language easier for taxpayers. "For the purposes of this Act, 'tax year' means the twelve months period of the financial year commencing on the 1st April." The use of the phrase 'assessment year', which refers to the year following the one for which tax is being paid, caused confusion among taxpayers, especially new ones.

Under the new bill, taxpayers will also need to report their crypto transactions. "Any person, being a reporting entity, as prescribed, in respect of a crypto-asset, shall furnish information in respect of a transaction of such crypto-asset in a statement," the bill read.  End

Reported by Kuldeep Singh 

Edited by Deepshikha Bhardwaj

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