Govt May Unveil New Income Tax Bill on Feb 6, Proposing Major Reforms

Govt May Unveil New Income Tax Bill on Feb 6, Proposing Major Reforms
The government is set to introduce a draft of the new Income Tax Bill on February 6, proposing sweeping reforms, including enhanced exemptions and tax slabs to benefit 1 crore taxpayers. The bill aims to simplify and streamline India’s tax code, reducing it by up to 3 lakh words.
Govt May Unveil New Income Tax Bill on Feb 6, Proposing Major Reforms
The government is set to introduce a draft of the highly anticipated Income Tax Bill on February 6, following significant revisions in the Union Budget 2025-26. This bill is expected to bring sweeping reforms to the current Income Tax Act, with a plan to reduce the existing 6 lakh words by up to 3 lakh words, making the tax code more streamlined and efficient.
In a move aimed at easing the tax burden on taxpayers, the new bill will focus on widening the tax net and providing greater exemptions. The revision comes after Finance Minister Nirmala Sitharaman’s announcement during the post-Budget press conference, where she highlighted that approximately 1 crore taxpayers would benefit directly from increased exemptions and rebates under the new tax regime.
Major Reforms in Income Tax Structure
The Union Budget 2025-26 introduced a significant change in tax slabs, especially for individuals with annual incomes up to Rs 12 lakh. According to the new tax structure, taxpayers earning up to Rs 12 lakh will no longer be required to pay income tax, offering substantial relief. This marks a decisive shift in India’s tax framework, as people earning up to Rs 1 lakh per month (excluding special income like capital gains) will benefit from the exemption.
Sitharaman stated that about 1 crore taxpayers would benefit from the enhanced tax exemption limit, which was raised from Rs 7 lakh to Rs 12 lakh. These individuals will now be exempt from paying income tax, thanks to the revamped structure.
Benefits for Middle-Class Taxpayers
One of the standout provisions of the new tax regime is its direct benefit to the middle class. For example, an individual earning Rs 8 lakh annually will have Rs 30,000 more in hand due to the zero tax liability introduced in the new system. This relief will extend to those with incomes up to Rs 12 lakh, with salaried taxpayers receiving an additional benefit of Rs 75,000 due to the standard deduction, increasing their exemption limit to Rs 12.75 lakh.
The introduction of a tax rebate adds further benefits, ensuring that individuals with taxable incomes up to Rs 12 lakh do not have to pay taxes. The maximum rebate available under the new structure is Rs 60,000, which would apply to taxpayers with an income of Rs 12 lakh, making their effective tax liability nil.
A Step Towards Simplification
The new Income Tax Bill is expected to streamline the complex tax code, eliminating redundant clauses and simplifying the entire structure. With a reduction of up to 3 lakh words from the current version, the bill seeks to make tax laws more comprehensible, user-friendly, and accessible to the average taxpayer.
Experts believe that these reforms will not only boost disposable income but also encourage better compliance by making the tax system less cumbersome. By expanding the tax net and offering increased rebates and exemptions, the government hopes to create a more inclusive tax regime that benefits a broader section of society.
The proposed Income Tax Bill is poised to bring about a historic change in India’s tax landscape. With its emphasis on simplifying the system and extending greater benefits to the middle class, the reforms aim to provide much-needed financial relief while also enhancing taxpayer compliance. The upcoming draft of the bill on February 6 will be eagerly awaited, with expectations high that it will usher in a new era of taxation in India.
Also read: Apple iPhone SE4 Leaks Online: Everything You Need to Know About Apple’s Next Budget iPhone