The Institute of Chartered Accountants of India (ICAI) has submitted its recommendations to the Lok Sabha select committee currently reviewing the Income Tax Bill, 2025. The key proposals include streamlining the legislation by reducing the number of sections and enhancing clarity in legal language to minimize litigation.
ICAI Advocates for Fewer Sections and Better Clarity
ICAI has urged the committee to reduce the total number of sections in the proposed Bill from 536 to approximately 436. The current Income Tax Act, 1961, comprises 819 sections, and ICAI believes the new Bill should aim for simplification rather than replacing complexity with another intricate framework.
"There is scope to fine-tune the Bill further. Some interpretations require clarification to ensure a more taxpayer-friendly framework," said Charanjot Singh Nanda, President of ICAI. The council members also highlighted that reducing ambiguities in the law would help prevent unnecessary tax disputes.
Select Committee Examining Recommendations from Key Stakeholders
The 31-member select committee, chaired by BJP MP Baijayant Jay Panda, is assessing inputs from ICAI, global consulting firm EY, and leading industry bodies such as the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce & Industry (FICCI).
Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025, last month, with the objective of replacing the outdated Income Tax Act of 1961. The new law aims to simplify the taxation system by making it more comprehensible for businesses and individual taxpayers.
Why the Income Tax Act Needs a Revamp
Experts note that the existing tax law has become cumbersome due to frequent amendments, judicial interpretations, and outdated provisions that continue to remain in force due to unresolved legacy issues.
"Over the years, multiple insertions and explanations have made the law increasingly complex. Certain provisions that have lost their relevance are still in place to address past cases," a taxation lawyer explained.
With ICAI's recommendations in consideration, the select committee is expected to finalize its report before presenting the revised Bill to Parliament for further deliberation. The proposed changes could mark a significant step toward making India's tax regime more transparent and taxpayer-friendly.
Conclusion
As the Lok Sabha select committee continues its review, the recommendations from ICAI and other stakeholders will play a crucial role in shaping the final draft of the Income Tax Bill, 2025. A well-structured and simplified tax law could ease compliance, reduce litigation, and foster a more efficient tax administration system in India.
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