Introduction to the Income-Tax Bill, 2025
The Income-Tax Bill, 2025, was introduced in February 2025 and aims to replace the existing Income-Tax Act, 1961.
According to the government, the new legislation will simplify tax laws for both taxpayers and administrators, making them clearer and more predictable.
The government argues the 1961 Act has become outdated, complex, and difficult to understand due to its numerous exceptions and provisos.
Limited Impact of the Bill
Despite its claims, the Bill’s changes are mostly cosmetic, maintaining many of the complexities and ambiguities of the existing law.
The removal of certain outdated provisions and the simplification of compliance requirements into tables and schedules do not address deeper issues like litigation and uncertainty.
The Bill does not fundamentally change the government’s approach to income taxation, which has remained largely the same for years.
Even with the new structure, many provisions are still complex, and the use of legal terms like “irrespective” instead of “notwithstanding” does little to simplify the law for the average taxpayer.
Legal and Procedural Concerns
The Bill risks reopening settled legal matters, which could result in more litigation rather than less.
Key provisions, such as the power of tax authorities to reopen completed assessments, remain unchanged but are now structured differently, which may lead to confusion and legal challenges.
The Bill does not sufficiently filter the excessive powers granted to tax authorities, which could lead to potential misuse and confusion in interpretation.
The overall approach still encourages litigation rather than providing clarity for taxpayers.
Privacy and Authoritarian Powers
One of the most concerning aspects of the Bill is the expansion of search and seizure powers, which now include access to digital information.
Authorities will be able to inspect any data stored in electronic devices or computer systems, including emails, social media accounts, and other digital platforms, without judicial oversight.
The lack of oversight means that tax authorities can access sensitive personal and professional data, which raises significant privacy concerns.
The Bill does not provide transparency or accountability mechanisms, leaving taxpayers vulnerable to unwarranted searches and seizures.
Call for Legislative Scrutiny
Critics argue that instead of completely replacing the 1961 Act, the government could have made targeted amendments to address the issues within the current law.
The Bill’s failure to balance simplification with protection of individual rights and effective governance raises concerns about its overall effectiveness.
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