Idea behind simpler, new income tax bill? So you can deal with taxes on your own

Finance Minister Nirmala Sitharaman has said that the new income tax bill, which will be presented in Parliament next week, will aim to make the IT Act relevant to the 21st century, with the focus being on encouraging citizens to manage their income tax on their own.

In an interview to Times of India a day after presenting the Union Budget 2025, Sitharaman said, “It will be a comprehensive approach to making it relevant to the 21st century, to an era which is technology-driven, where the taxpayer is most often doing it himself. For a citizen to be able to deal with the income tax on his own, the system should be simple enough for him to handle. This is what we are working towards.”

Sitharaman emphasised that the initiative also aims to foster trust between the tax department and taxpayers, outlining several measures introduced in the Budget to support this goal.

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Sitharaman said that the tax relief unveiled by her was meant to honour the honest taxpayer. She said it was not wise to keep loading the narrow tax base with taxes.

“But it is also equally upon us to widen the base and keep newer people coming in,” she was quoted as saying.

The finance minster said the govt would implement the 8th Pay Commission from Jan 1, 2026.

“The recommendations will be implemented at least for the core salary,” Times of India quoted her as saying.

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She also said macroeconomic fundamentals remain strong, which will help ensure that growth continues and insulate the country against global uncertainties.

The proposed new income tax law stems from the earlier Budget announcement for 2024-25. In July 2024, Sitharaman had initiated a comprehensive review of the Income Tax Act of 1961, with the goal of completing it within six months.

During her FY26 Budget speech, Sitharaman highlighted the government’s implementation of various reforms over the past decade to enhance taxpayer convenience, such as faceless assessments, a taxpayer charter, faster processing of returns, nearly 99 per cent of returns being self-assessed, and the Vivad se Vishwas scheme.

In July, she explained that the purpose of the review is to make the Act more concise, clear, and user-friendly, which is expected to minimise disputes and litigation while providing tax certainty to taxpayers.

In October of the previous year, the Income Tax department announced the establishment of an internal committee to review the Income Tax Act, inviting public input on four key areas: simplifying the language, reducing litigation, minimising compliance burdens, and eliminating outdated provisions.

With inputs from agencies