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New Income Tax Bill: The government announced in July 2024 its intention to conduct a thorough review of the Income-tax Act, 1961. The primary objective is to transform the Income Tax Act 1961 into a more straightforward, clear and comprehensive document, aiming to minimise disputes and provide taxpayers with greater tax certainty.
KPMG in India did a survey in January 2025 to gather industry perspectives on this simplification initiative. The survey encompassed responses from over 200 executives across various sectors, including Industrial Manufacturing, Automotive, Financial Services, Consumer Markets, Infrastructure, Energy and Natural Resources, Technology, Life Sciences, Healthcare and Pharma, amongst others.
Also Read | New Income Tax Bill cleared by Cabinet: What is the New Income Tax Bill & why is it being introduced? Explained
The survey revealed significant findings across multiple areas:
1. Priority Areas for Tax Simplification
84% of respondents prioritised dispute/litigation simplification.
64% advocated for simplifying TDS provisions, currently spanning 30+ transaction categories.
Other priorities included transfer pricing (50%), capital gains taxation (43%), and business income calculation (38%).
2. Interpretation & Tax Law Certainty
96% endorsed creating a government-published income-tax commentary, similar to the OECD model.
93% supported direct incorporation of beneficial clarifications from tax circulars/notifications into the Act.
3. Dispute Resolution & Litigation Reduction
Current pending tax cases exceed 6 lakh, with 5.5 lakh at CIT(Appeals) level.
69% supported introducing mediation/arbitration schemes.
62% favoured allowing tax authorities to appeal DRP decisions.
98% requested mandatory timelines for CIT(A) appeal disposal.
4. Compliance Enhancement
61% preferred a hybrid model for tax official interactions.
35% supported complete faceless transition, while 4% preferred traditional interactions.
87% supported eliminating mandatory TDS certificate issuance.
64% advocated for Form 26AS-based TDS credit allocation.
5. Corporate Tax Structure
58% supported corporate tax rate reduction.
34% were satisfied with current rates, whilst 7% sought reductions for non-resident companies.
43% acknowledged benefits of the simplified tax regime.
6. Timeline Improvements
82% requested extended deadlines for belated/revised returns.
94% suggested revising transfer pricing safe harbour rules.
7. Faceless Assessment Challenges
41% reported no reduction in aggressive assessments under faceless system.
60% suggested removing CIT(A) appeals from faceless mode.
The Cabinet has given its approval to the New Income Tax Bill on Friday, which will supersede the Income Tax Act 1961 that has served the country for 60 years. Following its introduction in Parliament, the bill will be forwarded to the Finance Standing Committee for thorough examination.
The initial phase of the ongoing budget session will end on February 13, before reconvening on March 10 and running through April 4.
During the Budget 2025-26 presentation, Finance Minister Nirmala Sitharaman confirmed that the New Income Tax Bill would be tabled in the present parliamentary session.
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