Finance Minister Nirmala Sitharaman announced the new income tax bill, also known as Direct Tax Code, during Budget 2025-26 presentation

New Income Tax Bill Set for Cabinet Approval latest news: The Union Cabinet, chaired by Prime Minister Narendra Modi, is expected to approve the new income tax bill during its meeting on Friday. This move will pave the way for the bill's introduction in the Lok Sabha as early as Monday, according to an India Today report citing sources.

Finance Minister Nirmala Sitharaman announced the new income tax bill, also known as the Direct Tax Code, during her Budget 2025-26 presentation last week. The bill aims to overhaul the existing income tax structure to simplify its provisions and replace the Income Tax Act of 1961.

Sitharaman emphasized that the new legislation embodies the philosophy of "Nyaya" (justice), which was central to the Bharatiya Nyaya Sanhita that replaced the Indian Penal Code of 1860 in July 2024. The goal is to make the tax system more transparent, reduce litigation, and ensure ease of compliance for taxpayers.

The bill is part of a broader push to reform the taxation system and is expected to be sent to the Standing Committee for further discussions and refinement after its introduction .

In her 2025 Budget Speech, Nirmala Sitharaman announced, "I am pleased to inform this August House and the nation that the new income tax bill will continue the spirit of 'Nyaya'. The new bill will be concise and straightforward, reducing the current law by almost half in terms of chapters and words. It aims to make the tax code easy for both taxpayers and tax authorities to understand, thereby ensuring tax certainty and reducing litigation."
The bill is expected to introduce a simplified residence rule, providing greater clarity in determining a taxpayer's residential status.

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