New Income-Tax Bill 2025 simplifies law, keeps policy intact: Baijayant Panda

The new Income-Tax Bill seeks to simplify language and structure without changing existing tax policies, said Lok Sabha MP Baijayant Panda, who chaired the 31-member select committee that reviewed the draft. In an interview with Business Standard, he clarified that the proposed legislation does not override the intent of the Income Tax Act, 1961, but modernises it to reduce complexity, litigation, and confusion for taxpayers.

“This is the first step towards simplification,” Panda said. “The law has become complicated. It is 64 years old and has undergone more than 4,000 amendments.” He noted that under Prime Minister Narendra Modi’s leadership, nearly 1,500 old laws have been scrapped or replaced to improve transparency and efficiency.

Union Finance Minister Nirmala Sitharaman had earlier stated that the 1961 Act would also be restructured in the same spirit. Panda said that as a first step, the government focused on simplifying the language of the law without altering its underlying policies.

“The number of words in the new Bill has been reduced by about 50 per cent,” Panda said. “The 1961 law had Latin phrases and complicated descriptions. Now, this Bill has simple language, formulas, and tables. Even experts couldn’t give clear answers under the old law.”

While many stakeholders have suggested policy changes, Panda clarified that this was not within the scope of the select committee’s mandate. “Our mandate was to simplify the law as it stood. Policy changes will be taken up at appropriate forums during the Budget process,” he said.

On concerns around the transfer pricing clause leading to more disputes, Panda explained that no changes have been made to the provision itself. “If you simplify the language of the Bill, things become clear. So if people do come within the ambit of the law, they should be paying tax,” he said. “The transfer-pricing provision hasn’t changed; just the language has been streamlined to remove ambiguity.”

The Bill is expected to be taken up in the Monsoon Session of Parliament. “The committee has made about 300 broad suggestions, but these are not binding. The Cabinet will decide which ones to incorporate,” Panda said.

Addressing concerns that the new Bill does not clarify the status of pending disputes under the current Act, he confirmed that it will take effect from April 1, 2026. “Until then, the old law stays. Current disputes will be adjudicated under that. This Bill doesn’t change policy; it only simplifies the language. No benefit already granted to taxpayers will be withdrawn.”

On the issue of pending appeals, Panda noted that faceless assessment has significantly improved transparency but is wrongly conflated with appeal backlogs. “The backlog began during the pandemic. But now, there is a surge in settlements,” he said. “With over 90 million filings—more than the UK’s population—the appeals are a tiny fraction. The aim is to settle all appeals within a year.”

He added that with rising return filings, resources must be scaled up. “Systemic issues are being addressed, and in the next few years, we should see a dramatic reduction in pending cases.”