New Income Tax Bill: Is this an old wine in a new bottle? Experts say this…

Union Finance Minister Nirmala Sitharaman on Feb 13 tabled the new Income Tax Bill in the Parliament. This was a landmark move as the entire 64-year-old income tax law was overhauled and the older complex provisions were made simpler and lucid amid much fanfare.

One of the key arguments given by the Finance Minister was that the new legislation will reduce the scope of litigation because it is simple to understand leading to tax certainty.

While the existing law has 823 pages as amended in 2024 whereas the new income tax bill is spread across 622 pages. So, the new law is shorter by 201 pages. There are several redundancies and cross referencing which have been removed. Among several changes which drew praise from taxpayers include the phasing out of assessment and it will be known as ‘tax year’.

But will the new legislation reduce the scope of litigation? Let us see what experts say on this. There are some contrarian voices. Some say that it is akin to presenting old win in the new bottle while another chartered accountant believes that tax provisions have not been substantially altered.

Old wine in new bottle?

There are some experts who believe that this new law is an old wine in the new bottle, which lacks novel concepts such as group taxation.

“The Bill seems to be a bunch-up and clean-up, old wine in new bottle exercise. The form gets simpler with no major changes to affect the substance. Being an attempt to revamp after 65 years, the expectation was of a contemporary novel code including newer concepts like group taxation, carry-back of losses, etc. But it seems the wait will be longer,” says CA Anand Bathiya, President, Bombay Chartered Accountants’ Society.

Lower litigation ahead?

There is optimism that the new law has simplified the language, and technical terms have been replaced. With this, there is expectation that the new law will reduce litigation.

“While the new Income Tax Bill, 2025 does not substantially alter the tax provisions, an attempt has been made to simplify the language and to replace the technical terms used in the existing law. The new Bill has done away with Provisos and Explanations, which at times causes interpretational issues and litigation. It is expected that that the new Bill will reduce litigation, but it would be interesting to see to what extent it reduces the litigation,” says Mitesh Jain, Partner at Economic Laws Practice.

Additionally, the new law does not address the ongoing litigations, which — some believe — should have been sorted.

“The Income-tax law should facilitate in reducing tax disputes going forward. However, the Finance Ministry should alongside focus on fast-tracking past litigation; particularly as a significant portion is still pending at the Commissioner (Appeals), first appellate authority. Resolving past litigation will truly be a move towards Viksit Bharat and improve taxpayer sentiments,” says Prashant Bhojwani, Partner, Tax & Regulatory services, BDO India.

However, Chirag Chauhan, a Mumbai-based chartered acccountant, believes that the already settled tax disputes have already been incorporated in the new Bill while there could be new disputes arising out of new provisions such as the definition of virtual digital assets.

“Someone can file a suit claiming that this asset does not fall into the definition of virtual digital assets. Besides there are some mistakes and ambiguities but they will be corrected by the time it becomes an Act. Even if it is the old wine, it is the refined one,” says Chauhan.

Few aspects remain

Some experts believe that there is still some scope of cross referencing with regards to the current income tax law and there are some aspects which still need consideration.

“While the attempt to make the law simple to understand is laudatory, a few aspects require consideration. For instance, the definition of income in the new Bill has more than 20 line items. The last line item classifies ‘any other income referred to in section 2(24) of the Income-tax Act, 1961’ as income as well. This would imply that to this extent, the new law would need to be read along with the existing act, which should ideally not be the case given the intent with which the new law has been proposed,” said Himanshu Sinha, Partner, Tax Practice, Trilegal.