The new Income Tax Bill is expected to drive more transparency in tax laws by integrating clear and unambiguous language in tax provisions. This will further allow the taxpayers to easily understand their obligations and rights.
FinMin Nirmala Sitharaman, is said to introduce the Income Tax Bill this week, which will then be taken to the Parliament's Standing Committee on Finance for scrutiny.
The proposal for an introduction of a new IT Bill has been a matter of current buzz, with the commitment of the government to ‘trust first, scrutinise later’. Furthermore, various stakeholders are anticipating positive changes as compared to previous income-tax law.
“It is expected that the new IT Bill 2025 would address the issue of complexity in determining tax residency of an individual in India. Currently, it involves multiple conditions for qualifying an individual as a tax resident,” highlighted Harsh Bhuta, Partner, Bhuta Shah & Co.
The income tax law comprises a great deal of humongous tax provisions, currently, wherein, the new IT Bill is expected to address the challenges faced by the tax payers by eradicating certain redundant and obsolete provisions while reducing its volume considerably.
Furthermore, as per the experts, the new IT Bill would not come up with new tax but will come up with an approach to focus on facilitating tax compliance in a better way.
Adding to this, it is also expected that announcements for income-tax reliefs or amendments to the income-tax law will not require budget proposals, and the government can make the changes to relief by way of executive orders. In case of gross non-compliance, Bhuta further stated that the focus of the new IT Bill will be on reduced number of scrutiny to ensure that undue harassment to honest taxpayers is curbed. This will also lead to the decrease in litigation issues.
And by simplifying the compliance process making it easier and comprehensible for all taxpayers thereby ensuring savings in cost and time, the new IT Bill is set to reduce the complex compliance burden.
“Experts said that the ongoing review of the Income-tax Act, 1961 would be to focus on driving the modernization and simplification of India's tax system in line with broader economic goals while aiming to enhance the ease of doing business, improve tax administration and compliance, while reducing ambiguity in interpretations. This will help increase India's tax-GDP ratio to global levels and support sustainable economic growth,” stated Sandeep Chaufla, Partner at Price Waterhouse and Co (PwC).
Kunal Varma, Co-Founder & CEO at Freo said, "The new Income Tax Bill is expected to simplify tax laws, reduce legal complexities, and make compliance easier—something that insurance policyholders have long hoped for. A key expectation is the enhancement of tax deduction limits for life and health insurance premiums, particularly under Sections 80C and 80D. Increasing these limits will provide stronger financial incentives for individuals to secure adequate insurance coverage. Additionally, policyholders want assurance that the maturity amount from life insurance policies remains tax-exempt as long as premiums paid do not exceed a certain limit, ensuring that their long-term financial planning remains intact.”
He further added, “Another crucial aspect is the need for targeted tax benefits that can boost insurance penetration in Tier 2 and Tier 3 cities. By making insurance more tax-efficient and accessible, the government can drive deeper adoption and financial security across a wider population. We strongly believe that simplifying tax laws and introducing meaningful incentives for insurance will encourage more Indians to protect themselves and their families against financial risks."
Adding to this, Pankaj Nawani, CEO at CarePal Secure showcased five noteworthy aspects what insurance policyholders can expect from the new tax framework:
1. The new tax structure proposed is good. It simplifies tax for the majority.
2. The tax deductions might not be there for life and health insurance but extra money that will get saved will be utilized not only for consumption but also for better protection
3. It will also give a fillip to the employer-employee protection plan which can be made flexible
4. The provisions of making proceeds from life insurance policies bought from Gift City could see a lot of HNIs and the upper middle class get interested
5. NPS contribution from employers continues to get favorable tax treatment but India is fast becoming a nation of entrepreneurs and salaried employed professionals. Hence the same breaks should be made available to them as well.
