India with Budget 2025: New Income Tax Law cleared by Cabinet, says Finance Minister

India with Budget 2025: The new income tax law, which will replace the six-decade-old Income Tax Act, is expected to be introduced in the Lok Sabha next week, according to Finance Minister Nirmala Sitharaman's statement on Saturday. Following its introduction in the Lok Sabha, the bill will be referred to a parliamentary standing committee for review.

It should be noted that the Union Cabinet, chaired by Prime Minister Narendra Modi, approved the bill on Friday.

"Yesterday, the Cabinet cleared the New Income Tax proposal, I hope to have it introduced in the Lok Sabha in the coming week. Post that it will go to a committee," Sitharaman said a media briefing after addressing the post-Budget customary meeting with the central board of directors of the Reserve Bank of India (RBI).

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Following the parliamentary committee's recommendations, the bill will once more be sent to the Cabinet. It will be reintroduced in Parliament after Cabinet approval.

"I still have three critical stages to pass through," Sitharaman said to the query regarding rollout of the new income tax law.

In the July 2024 Budget, Finance Minister Sitharaman had first announced a comprehensive review of the Income-Tax Act, 1961.

To oversee the review, the Central Board of Direct Taxes (CBDT) set up an internal committee to make the Act more concise, clear, and user-friendly, aiming to reduce disputes and litigations while providing greater tax certainty for taxpayers.

Additionally, 22 specialised subcommittees have been formed to review various aspects of the Income Tax Act.

In response to another query, Sitharaman explained that last week's budget announcement on rationalising customs duties is part of a project that has been ongoing for the past two years.

"So we had rationalised some even two years ago. We also set certain norms saying evergreening is not going to happen on anti-dumping duties, which had played a big role in giving some kind of a protection for India's own manufacturing capabilities," she said.

Sitharaman added that as each such expiration date approaches, the government will carefully review it and only in extraordinary circumstances will duties be prolonged; nonetheless, they should typically be completed to prevent the protection from becoming everlasting.

"So, this is an ongoing process. We want to make India a lot more investor-friendly, trade friendly, and at the same time, balance it with Aatmanibhar Bharat where we need to have production, particularly through the MSMEs. We will provide the tariff protection as required by the industry," the Finance Minister, who presented her eighth straight Budget on February 1, said.

In her Budget speech, Sitharaman announced the rationalisation of the customs tariff structure for industrial goods.

As part of the comprehensive review of the customs rate structure announced in the July 2024 Budget, she proposed on February 1, 2025, to remove seven tariff rates. This is in addition to the seven tariff rates removed in the 2023-24 Budget.

After these adjustments, only eight tariff rates will remain, including the 'zero' rate.

With the inputs from PTI