Finance Minister Nirmala Sitharaman announced on Tuesday that the new Income Tax Bill will be taken up for discussion in the monsoon session of Parliament. The bill, introduced on February 13, is currently under review by a Select Committee, which is expected to submit its report by the first day of the next session.
During the Lok Sabha discussion on the Finance Bill 2025, FM Sitharaman emphasized that the proposed legislation will formally recognize digital records for tax assessment, addressing a critical gap in the Income Tax Act of 1961. “The current law permits the examination of physical books of accounts but does not explicitly include digital records,” she noted. This loophole has led to legal disputes, with individuals seeking protection against disclosing digital passcodes. The new bill aims to close this gap, ensuring digital records are treated as valid evidence.
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Key Provisions of the Bill
One of the most controversial provisions of the new law grants tax officers the authority to override access codes of computer systems, virtual digital spaces, and online accounts during search and seizure operations. The bill defines “virtual digital space” to include:
- Email servers
- Social media platforms
- Online trading & investment accounts
- Cloud servers
- Digital platforms storing asset ownership details
Beyond digital taxation, the bill introduces a significant simplification of the current tax framework. The word count has been reduced from 5.12 lakh to 2.6 lakh, while the number of sections has been cut from 819 to 536. The 23 streamlined chapters now feature 57 tables, up from 18, with 1,200 provisos and 900 explanations removed to enhance clarity and minimize litigation.
With the monsoon session (typically held from July to August) set to witness intense deliberations, the proposed reforms aim to modernize India’s tax system, improve transparency, and adapt to the digital age.