India’s Income Tax Bill, 2025: Modernising A Six- Decade-Old System
- IJLLR Journal
- Aug 21
- 2 min read
Shaashwat Mishra, Hidayatullah National Law University
Introduction
India’s tax code has just witnessed one of the most significant amendments in its post – Independence history. The Income Tax (No. 2) Bill aims to substitute the Income Tax Act, 1961. An act whose language, structure and several amendments had become cumbersome for not only courts, tax administrators but taxpayers as well. This new bill assures simpler language, better alignment with contemporary economic tools including clearer tax treatment of pensions and retirement receipts, revamped procedural rules envisioned to reduce litigation and speed compliance and digital assets.
Legislative Context and Procedural Timeline
The initial draft of the Income-tax bill 2025 was listed earlier this year and was simultaneously referred to a Lok Sabha Select Committee. After receiving recommendations and public response the government removed that initial bill and tabled a revised version. Formally titled the Income-tax (No. 2) Bill 2025 on August 11, 2025. The revised Bill incorporates many suggestions of the Select Committee and stakeholder submissions making it the version now under consideration in Parliament. The government’s stated goal has been to maintain continuity with existing substantive law while recasting, consolidating, and modernising the statutory text.
What the Bill sets to Achieve
At a high level, the Bill pursues four interlocking objectives:
• Simplification of archaic and prolix drafting into concise, modern legal drafting.
• Consolidation of scattered provisions to reduce cross-referencing.
• Procedural modernisation — a digital-first, faceless administration with clearer timelines for assessments and refunds, and
• Alignment of tax treatment with new realities such as Unified Pension Schemes and virtual digital assets. The government’s public communications and the Bill text emphasise that the aim is not a radical redistribution of tax incidence, but greater legal clarity and administrative efficiency.
