Major Tax Reform In Budget 2025? What We Know So Far

The government will introduce the Direct Tax Code (DTC) separately, rather than including it in the Union Budget 2025, which Finance Minister Nirmala Sitharaman is set to present on Saturday (1 February) morning, NDTV reported citing sources.

The new tax bill aims to simplify compliance for individual taxpayers.

Earlier reports suggested that the new tax code, known as DTC, might be announced as part of the budget speech.

Discussions around a new direct tax code began in July last year, when Sitharaman presented the full 2024/25 budget.

At the time, she stated that the goal was to make existing income tax laws more accessible and reduce the length of the I-T Act of 1961 by an estimated 60 percent.

The I-T Act of 1961, which deals with direct taxes such as personal and corporate tax, along with levies on securities transactions, gifts, and wealth, comprises 23 chapters and 298 sections.

The proposed changes are expected to simplify tax calculation and return filing.

One of the major changes could be the elimination of the concept of financial year (FY) vis-a-vis accounting year (AY).

Additionally, there is speculation about introducing a flat 15 percent tax on dividends earned.

Earlier reports had suggested that the bill might be tabled in the budget session of the Parliament.

Ahead of Ms Sitharaman's announcement on major changes in the I-T Act, the Central Board of Direct Taxes (CBDT) had formed an internal committee to oversee the review process.

This initiative included 22 specialised sub-committees, each tasked with assessing different aspects of the existing tax law.

In October, the central government invited members of the public, including stakeholders and subject experts, to offer their views and recommendations.

By January, around 7,000 recommendations had been received.

Also Read: Odisha’s Business Summit Draws Rs 16.73 Lakh Crore Investments, MoUs Signed Across 20 Sectors