The Income Tax Department has initiated the process of framing the rules, forms, and procedures under the proposed Income Tax Bill, 2025, which is set to replace the existing Income Tax Act, 1961, said CBDT Chairman Ravi Agarwal during the 166th Income Tax Day celebrations in the capital on Thursday.
Speaking at the event, Agarwal emphasized that the new framework will reflect the values of clarity, simplicity and taxpayer convenience, aligning with the intent behind the draft legislation introduced earlier this year.
"Work is already underway to give shape to its rules, forms and procedures-a critical next step," he said. "These will define how the law is applied in practice and I am confident they will reflect our shared commitment to clarity, simplicity, and ease for taxpayers," Agarwal said.
Income Tax Bill 2025: A Step Toward Reform
The Income Tax Bill, 2025, introduced in Parliament on February 13, proposes a comprehensive revamp of India's direct tax laws. It has already gone through detailed examination by a parliamentary panel, which submitted its report on July 21, offering extensive recommendations to simplify and modernize the legislation.
The bill is part of a larger reform effort to reduce litigation, consolidate TDS provisions, and remove legal complexities by replacing archaic language with a more lucid and taxpayer-friendly code.
"Viksit Bharat" Through Fair Taxation
Agarwal underlined the department's commitment to fair and efficient tax collection, positioning tax reform as central to the government's Viksit Bharat (Developed India) vision. "We aim to strengthen voluntary compliance, reduce taxpayer burden and build systems that inspire trust," he added.
Technology-Driven Tax Administration
Highlighting the department's increasing reliance on technology and data analytics, Agarwal said these tools are now central to identifying inconsistencies and prompting voluntary disclosures.
He cited the success of the Nudge campaign, which uses behavioural insights and transactional-level data to alert taxpayers about possible discrepancies in their filings-ranging from undisclosed income to high-risk deductions.
"This is enforcement with empathy," Agarwal remarked. "We now enable taxpayers to review and voluntarily update their returns instead of immediately initiating compliance actions. It reflects the department's evolving mindset-one that places trust in the taxpayer."
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