Synopsis
The Indian government plans to introduce a new Income Tax Bill on February 6, following revisions in tax slabs during the Union Budget 2025-26. The draft bill aims to reform the existing Income Tax Act, potentially reducing its length significantly while benefiting millions of taxpayers with increased exemptions.Key Takeaways
- New Income Tax Bill draft to be unveiled on February 6.
- Proposed reforms may cut down the content of the Income Tax Act significantly.
- Approximately 1 crore taxpayers expected to benefit from new exemptions.
- Income tax exemption limit increased from Rs 7 lakh to Rs 12 lakh.
- New tax slabs could provide substantial savings for taxpayers.
New Delhi, Feb 3 (NationPress) Following the adjustments in tax brackets in the Union Budget 2025-26 aimed at putting 'more money in the hands' of taxpayers, the government is poised to present the highly awaited draft of the new Income Tax Bill on February 6.
This proposed legislation seeks to implement extensive reforms to the existing Income Tax Act and may see a reduction of approximately 3 lakh words from the current total of nearly 6 lakh words.
As stated in a report by NDTV Profit on Monday, based on sources familiar with the matter, the draft bill is expected to include guidelines for expanding the tax base, especially in light of the recent contraction following the new exemption limits.
Union Finance Minister Nirmala Sitharaman, during her post-Budget press briefing, noted that about 1 crore taxpayers will directly benefit from the extended rebates and exemptions under the New Tax regime.
She highlighted that one crore individuals will gain from the increased tax exemption threshold, raising it from Rs 7 lakh to Rs 12 lakh, resulting in no income tax obligation for them.
Under the proposed new slabs in the Budget 2025-26, individuals earning up to Rs 12 lakh will not be required to pay income tax, indicating a significant shift in the tax framework.
When comparing the current tax rates to the proposed new rates for FY25-26, she mentioned that those earning Rs 8 lakh will enjoy an additional Rs 30,000 in their pockets due to a complete waiver of their tax liabilities.
Individuals earning up to Rs 12 lakh (with an average monthly income of Rs 1 lakh, excluding special rate income like capital gains) will not have to pay any income tax under the new regime. For salaried individuals, this limit will be Rs 12.75 lakh due to a standard deduction of Rs 75,000.
The tax rebate is provided in conjunction with the benefits from the reduction in slab rates, ensuring that eligible taxpayers have no tax liabilities. A maximum rebate of Rs 60,000 is available for taxpayers with an income of Rs 12 lakh as per the new slabs.
