Paper: GS – II, Subject: Polity, Topic: Legislature, Issue: Income Tax Bill 2025.
Context:
The Income Tax Bill 2025, recently passed by the Lok Sabha. It delves into the key changes introduced by the bill, including the simplification and rationalization of the existing Income Tax Act, 1961, and the expansion of powers granted to income tax officials, particularly concerning access to personal electronic data during search operations.
Key Takeaways:
Comparison Between the Old and New Income Tax Bills:
| Aspect | Old Income Tax Bill | New Income Tax Bill |
| Tax Slabs | Complex structure with multiple slabs and higher tax rates | Simplified structure with fewer tax slabs and lower rates |
| Exemptions & Deductions | Numerous exemptions (HRA, 80C, etc.) and deductions available | Reduced exemptions and deductions; fewer options for tax saving |
| Rebate on Income | Limited rebates based on specific conditions (e.g., 87A) | Broader rebate under section 87A for incomes up to â‚ą7 lakh, making it tax-free for lower-income individuals |
| Tax Filing Process | Complex filing process, multiple forms required | Simplified filing with fewer forms and a more streamlined process |
| Corporate Tax Rates | Higher corporate tax rates | Reduced corporate tax rates to make India more competitive globally |
| Focus on Technology | Relatively less reliance on digital infrastructure | Strong emphasis on digital filing, processing, and technology integration |
| Taxpayer Benefits | Greater scope for reducing taxable income through exemptions. | Lower tax rates but fewer options to reduce taxable income, simplifying the system for general taxpayers. |
Concerns and Challenges of Broadened Powers for Income Tax Officials:
Conclusion:
The Income Tax Bill 2025 represents a significant overhaul of the Indian income tax system. By implementing appropriate safeguards, limiting the scope of these powers, and enhancing transparency, the government can address these concerns and ensure that the new tax regime is both effective and respectful of fundamental rights.
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