The Centre is all set to introduce Income-tax Bill 2025 in the Parliament very soon in keeping with the promise made during the Finance Minister’s Budget speech on February 1. Admittedly, the changes proposed are not paradigm or earthshaking but only peripheral if not superficial. Americans are apt to say don’t fix anything that ain’t broken. Continuity is not adherence to the status quo. CompanyValueChange%ChangeTo be sure, like the Companies Act, 1956, the income-tax Act, 1961 has become a patchwork of amendments. So, the rationale for rewriting the entire law could be the same as adduced for the brand-new Companies Act, 2013 —fewer pages and sections. But then continuity has the merit of perpetuating familiarity if not shibboleths. That is why the replacement of IPC or the Indian Penal Code with the Bharatiya Nyaya Sanhita (BNS) was assailed by its critics and detractors as old wine in new bottle besides upsetting the rhythm and flow of the advocates and judges alike. The new Income Tax Bill brings structural refinements, deadline extensions, and digital transaction incentives, while maintaining familiar tax provisions. The bill continues to encourage digital transactions, offering tax audit relief for businesses with turnover up to ₹10 crore that primarily deal in digital payments. This change could have been incorporated in the extant Act itself.
The Bill also replaces the traditional “Assessment Year” (AY) and “Previous Year” (PY) with a unified “Tax Year”. This change simplifies tax terminology, making it more understandable for taxpayers which is fine but once again beggars the question if amendment could have sufficed. Contrast this with the Direct Taxes Code 2010 which never saw the light of the day. It spelt roots and branches reforms to the income tax law making all incomes equal without special favours. Income from house property and capital gains were sought to be given a parity of treatment under the sage philosophy that income is income and all incomes should be taxed alike. A new law should not smack of being a vanity project just to tinker with the existing law just for the heck of it. Even the admittedly welcome move to arm the CBDT with more powers without having to wait for the Parliamentary imprimatur could have been accomplished within the existing framework. Novelty for the sake of novelty can often be counterproductive as happened a few years ago when Infosys was asked to redesign the e-filing portal. That exercise introduced several snafus in the system which took a while to be corrected.The Indian Constitution is of the 1950 vintage. It has been amended 106 times since its inauguration. It could very well have been rewritten too but that would have stoked the needless skepticism that the ruling dispensation is tinkering with Babasaheb Ambedkar’s constitution held sacrosanct almost universally by people cutting across party lines. The Indian Constitution is one of the most seminal documents, and it has stood the test of time. It is resilient enough to accommodate amendments. No law should be allowed to remain trapped in a time warp. While changes and amendments are necessary to stay in line with the times, as legal luminary Nani Palkhivala said, not all changes constitute progress. Chronic tinkering is not real change, let alone a progressive measure.Even administrators, such as the assessing officers, are likely to be hindered by the proposed new law, as familiarity and continuity are crucial for effective administration. To avoid being mistaken for someone advocating for the status quo, it must be emphasised in conclusion that while progressive changes are welcome, changes made merely for the sake of change can be ineffective.—The author, S. Murlidharan, is a Chartered Accountant and legal expert. The views are personal.Read his previous columns here(Edited by : Unnikrishnan)First Published: Feb 13, 2025 10:13 AM IST
