Finance Minister Nirmala Sitharaman has announced that the government is expected to introduce the new income tax bill in the Lok Sabha next week.
The bill, aimed at replacing the six-decade-old Income Tax Act, 1961, has already been approved by the Union Cabinet, chaired by Prime Minister Narendra Modi.
Following its introduction in the lower house, the bill will be sent to a parliamentary standing committee for further scrutiny.
Sitharaman, while addressing the media after her post-budget meeting with the Reserve Bank of India’s central board of directors, confirmed that the legislation will undergo multiple stages of review before its final implementation.
The Finance Minister explained that after the committee submits its recommendations, the bill will once again be presented to the Cabinet before being reintroduced in Parliament for final approval.
She acknowledged that there are still three crucial stages to pass through before the law can be rolled out.
The decision to bring a new income tax law was first announced in the Union Budget of July 2024. The Central Board of Direct Taxes (CBDT) had subsequently set up an internal committee to review the existing tax framework and ensure that the new law is concise, clear, and easy to understand.
The aim is to reduce tax-related disputes, minimise litigation, and offer greater clarity to taxpayers. In addition, 22 specialised sub-committees were formed to examine different aspects of the tax structure.
Sitharaman also addressed concerns related to customs duty rationalisation, which was highlighted in the Budget. She stated that this has been a continuous process over the past two years, with adjustments being made to streamline the structure.
She added that India’s approach to trade and investment will be balanced with the goals of Aatmanirbhar Bharat, ensuring that necessary tariff protections are in place for the country’s manufacturing sector, particularly micro, small, and medium enterprises (MSMEs).
As part of the broader customs rate review, the Finance Minister had earlier announced the removal of seven tariff rates in the latest Budget, in addition to the seven rates that were scrapped in the previous year. The current structure now retains only eight tariff rates, including the zero rate.
Fiscal and Monetary Measures to Boost Growth and Investment
Sitharaman also highlighted the impact of fiscal and monetary policies in driving economic recovery. She said that the recent measures announced in the Budget, including income tax cuts for the middle class, will help boost consumer spending and stimulate private investment.
As part of the tax relief measures, individuals earning up to ₹12.75 lakh annually will not have to pay any income tax, benefiting around one crore taxpayers.
Sitharaman noted that early signs of recovery are already visible, with business leaders reporting an increase in orders for fast-moving consumer goods for the April-June quarter.
On the monetary front, the Reserve Bank of India recently lowered its policy rate by 25 basis points, marking the first rate cut in five years. This move is expected to support economic growth and encourage private sector investments.
The Finance Minister stated that many companies are now reassessing their production capacity, indicating a revival in consumer demand. She expressed optimism that the combination of fiscal policies and RBI’s monetary decisions will create a favourable environment for economic expansion.
Sitharaman reiterated that the government and RBI will continue to work in coordination to sustain growth while keeping inflation under control. She emphasised that fiscal and monetary policies are aligned to ensure economic stability and long-term development.
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