Simplification, modernisation and consolidation are the pillars on which new income tax bill stands: Deloitte's Anil Talreja

With lesser provisions and clauses, and the subsequent low scope of interpretation, the Income Tax Bill, 2025, is likely to boost compliance, and reduce litigations, restoring the confidence of tax payers in the tax authorities, says Anil Talreja, Partner, Deloitte India, in an exclusive conversation with Fortune India.

Q. How do you read the changes made in the bill?

The whole thing, I could summarise, has couple of pillars. The first is, I think, simplification, which is always the case. The government has attempted very heavily to simplify the tax law. They have also ensured minimum scope for multi-interpretations.

Many provisions have been consolidated. So, for example, provisions pertaining to salary are all now sitting at one place. Provisions pertaining to non-residents are at one place. Provisions pertaining to non-government, non-profit organizations are at one place. So, various tax provisions applicable to different sections of the taxpayer community -- international, domestic -- sitting in different regions of the document at present have been consolidated.

Number of chapters has been reduced. The old law had about 47 chapters. The old law had over 130 sections, and the new law had over 530 sections. Additional tables have been brought in to explain and make the law lucid, easy to read, and easy to understand.

So, these are the four or five pillars on which the document is now standing.

Q. What happens to the existing litigations and how will it help compliance?

Existing litigation and were not the aim of this bill, as in compliance and all, that is not the aim of this bill.

On compliance front, if you see, the current law - the Income Tax Act 1961 - was quite complex because there were several provisos and explanations. 1,200 provisos and about 900 explanations have been eliminated in the new Bill. Imagine 2,000-odd provisos, explanations sitting in different parts of the Act were present and a good amount of them were in the compliance part, which was resulting in cross-referencing and referencing of various sections, adding to more confusion.

It led to interpretation and litigation, resulting in tax amounts locked up in litigations.

This will reduce litigations going forward, which will also help the taxpayers to increase the level of confidence in the tax authorities.

Q. What about the ongoing scrutiny and assessment cases as per the existing act, post the roll out of new act on April 1 next year?

There is a whole transition section, which has been introduced in this law, whereby the government has ensured that any overhang or past compliance gets ultimately addressed one way or the other. Provisions and sections, have been introduced to that effect in a smooth manner.  

Q. How would the “tax year” principle introduced in the bill work?

Very simply put, the tax year is going to be the year in which you are liable to tax. So, if you take what has come out in the bill, April 1, 2026 to 31st March 2027 is going to be your tax year. So, rather than one more area of confusion that prevailed -- concept of financial year, previous year, and assessment year -- all these have been now culminated into simple tax year.

Q. So, when you say tax year 26-27, the first return as per this bill will be filed in July 2027 for individuals.

Yes. Correct.

Q. Any key changes in the provisions pertaining to crypto?

There have been references made to definition of virtual digital assets, with specific reference to crypto. But there is no additional obligation or reduced obligation.  Nothing of that sort.

Q. What about the significant economic presence principles? Are there any changes and will there be any reason for concerns for the foreign digital companies like Amazon and Meta, Netflix and all?

From the quick reading, I don't see any red flags in the significant economic presence provisions. It is in line with provisions contained in the current law and I don't see any cause of concern.