The government has accepted most of the committee’s recommendations, paving the way for its likely passage in the ongoing monsoon session.
At first glance, the new Bill appears to simplify India’s notoriously dense tax code. It’s shorter, cleaner, and more intuitively laid out. But scratch the surface, and questions emerge: does a change in language truly make for a simpler law?
A clean slate
While the new Income Tax Bill boasts a significantly reduced word count—almost half of the existing Income Tax Act—this brevity is largely a result of smart formatting and presentation rather than a fundamental simplification of the law.
Much of the detailed content that previously existed as dense prose in long-winded sections, sub-sections, provisos and explanations has now been streamlined into clearer tables, schedules, and structured sections.
For instance, the existing bulky sub-clauses containing saving and investment avenues in section 80C have now been moved into a separate Schedule XV. This reorganization enhances readability and accessibility, but the underlying legal complexity and scope of the law largely remain intact.
Words that matter
The Bill replaces traditional legal expressions like “notwithstanding anything” with “irrespective of anything.” While the latter may sound simpler, it lacks the legal clarity that decades of judicial interpretation have attached to the former. “Notwithstanding” indicates overriding power—“irrespective” does not carry that settled meaning, potentially reigniting legal disputes courts had already resolved.
Moreover, for a common taxpayer, both phrases remain equally opaque. Replacing legalese with plain language doesn’t necessarily make the law easier to follow—certainty in interpretation matters more than tone.
There’s no change in the fundamental classification of income. The new Bill retains all five heads of income—salaries, house property, business or profession, capital gains, and other sources. These are simply presented in a neater layout.
Key provisions, such as tax slabs, standard deductions, and the ₹12 lakh threshold under the new regime, remain as defined in the Finance Act, 2025. This ensures continuity and avoids compliance shocks—but also means that long-standing complexities such as capital gains computation, valuation rules, and transfer pricing remain intact.
Provisos reimagined
A major shift lies in how the Bill handles provisos. The 1961 Act used them to carve out exceptions to main provisions, often viewed as subordinate. The new Bill, however, replaces many of these with separate sub-sections.
While this improves visual clarity, it can change legal interpretation—turning what was once an exception into a standalone obligation or right. This could reopen settled positions and generate fresh litigation, particularly when courts try to interpret these new standalone sub-sections.
In an unexpected move, the new Bill dials back the codified certainty around faceless assessments and appeals. Instead of clear statutory mandates, it leaves much of the process to be prescribed via future government notifications or schemes. This opens the door to discretionary interpretations and potential confusion around procedure.
The Bill explicitly grants tax authorities powers to access digital devices, cloud storage, and social media during search and seizure operations. Though these were often exercised informally, they now gain legal footing. This raises privacy concerns and the urgent need for clear procedural safeguards to prevent misuse.
The real test ahead
To its credit, the Bill streamlines definitions, introduces logical sequencing, and replaces dense legal blocks with structured tables and sub-sections. It also adopts more intuitive terminology—such as replacing “previous year” and “assessment year” with “tax year.”
These changes will certainly help professionals and users navigate the law more easily. But true simplification requires more than a cosmetic facelift—it must reduce ambiguity and litigation, not merely restructure it.
The Income Tax Bill, 2025 brings welcome clarity in format and a future-ready design. But tax law isn’t just about how it reads—it’s about how it works. The law’s strength lies in the continuity of judicial interpretation, and rewriting it without preserving this context risks making it unpredictable in practice.
The real test won’t be readability. It will be how well the new law holds up—in assessment proceedings, in courts, and in reducing taxpayer disputes.
Mayank Mohanka is founder, TaxAaram India, and a partner at S.M. Mohanka & Associates.
