The new income Tax Bill has ended, for now, the speculation that the old tax regime will end. The Bill, once introduced, will be referred to the department-related Standing Committee on Finance.
Meanwhile, experts say that the new Bill retains all the provisions from the Income Tax Act, 1961, ensuring continuity while eliminating redundant sections and outdated clauses.
Commenting on key features of the new Bill, Amit Maheshwari, Tax Partner at AKM Global, said that contrary to speculations, the old tax regime will not be abolished but will continue to operate alongside the new regime, offering taxpayers flexibility in choosing the system that best-suits their needs.
Moreover, clauses from the other laws such as ‘wealth tax’ have been incorporated clearly in the code as compared to earlier referencing which was making interpretation complex, he said.
Simpler laws
He highlighted one of the significant changes — the newly-introduced Section 275(6), which mandates that the Dispute Resolution Panel (DRP) must provide detailed directions, explicitly stating the points of determination, its decision and the reasons behind it. This marks a significant shift from the earlier Section 144C, which lacked clarity on the manner of issuing DRP directions.
“With this amendment, DRP orders will now be well-reasoned and adequately explained, ensuring transparency and reducing reliance on past rulings. This change is expected to enhance taxpayer confidence and improve the quality of dispute resolution in tax matters,” he said.
Experts feel that disputes will come down. Rohinton Sidhwa, Partner at Deloitte India, said the primary objective of the new Bill is to simplify tax laws, ensuring they are more transparent, easier to interpret and taxpayer-friendly. By replacing complex provisions with clearer provisions, it aims to reduce legal disputes and encourage voluntary tax compliance.
Greater clarity
“This reform is a significant step towards modernising India‘s tax framework, bringing greater clarity and efficiency. However, its success hinges on smooth implementation and how well taxpayers adapt to the changes. The Bill promises a more streamlined, accessible tax system, making it easier for citizens and businesses to fulfil their obligations while fostering trust in the system,” Sidhwa said.
As per the proposed law, clearer tax treatment on employee stock options (ESOPs) have been included for reduced tax disputes and it includes judicial pronouncements of the last 60 years for more clarity. Also, income not forming part of total income have now been moved to schedules to simplify the statute.
According to Sandeep Jhunjhunwala, M&A Tax Partner at Nangia Andersen LLP, the Bill, subject to approval and amendments under the Parliamentary process, is slated to be effective only from April 1, 2026, which implies that “computation of taxable income and its reporting, for financial years ending March 2025 and March 2026, would still be required to be done under the existing Income Tax Act itself.”