How did the Income Tax Department complete the “mammoth” task of rationalising and simplifying the huge Income Tax Act 1961 in just about six months, and then implementing the Select Committee’s voluminous suggestions in just one month? By cramming in 75,000 man-hours of work in that time and even putting probationers on the job, that’s how.
The result was the hugely condensed and significantly more user-friendly Income Tax Act 2025.
“The announcement by the honourable Finance Minister was made on July 23, 2024 that within six months the entire process of simplification of the law, to make it more lucid, clear, and precise will be achieved,” R.N. Parbat, the Central Board of Direct Taxes (CBDT) member in charge of legislation, told The Hindu. “The task was given to the Department of Revenue and the CBDT. It was to be done in-house.”
By August 14, the drafting committee under Chief Commissioner of Income Tax V.K. Gupta was formed, and that’s when the work began in earnest. Subcommittees were formed to look at every aspect of the law with a view to remove redundant sections and review the rest.
As the scope of the work became more clear — the original 1961 Act had 819 sections — the number of subcommittees also grew. By the end of it, there were 26 different subcommittees, according to Mr. Parbat.
Apart from this, the process also incorporated a review committee that was tasked with reviewing the work done by the drafting subcommittees.
“Once the review committee completed its work, it came to the Tax Policy and Legislation [TPL] division of the CBDT,” Mr. Parbat explained. “And after that, when a draft was formed, it was reviewed by another set of senior officers of the CBDT.”
Throughout this, the Revenue Secretary and the Finance Minister took regular briefings with the drafting committee and the TPL, while the Ministry of Law was also consulted.
“The work was broadbased, with more than 150 officers of the Department working on it,” Mr. Parbat said. “That included our Chairman, who was from the 1988 batch. At the same time, the junior-most person on the team was from the 2018 batch. Officers from all over India were selected for this purpose. We also involved our probationers who were undergoing training in Nagpur involved in the process.”
The draft of the Bill was laid before Parliament on February 13, 2025, six months after the drafting committee was formed. The number of chapters has been slashed from 47 to 23 and the number of sections from 819 to 536.
The new Bill included 57 tables as explanations, up from 18 and 46 formulae compared to the previous six. The language was greatly simplified, jargon and archaic words such as ‘notwithstanding’ were removed as far as possible, and examples were provided where needed.
To put this in context, the Parliamentary Select Committee that was tasked with reviewing these changes took five months to submit its report.
“They forwarded around 1,312 suggestions to us, so again our TPL division officers along with the core committee members of the drafting committee formulated the written replies and submitted them to the Select Committee,” Mr. Parbat said.
After receiving the written and oral replies from the revenue secretary, the chairman of the CBDT, Mr. Parbat and his team, along with the core members of the drafting committee, the Standing Committee submitted its report to Parliament on July 16, 2025.
The revised Bill was then passed in Parliament on August 12, 2025 — just one year after the drafting committee was formed. With the U.K. and Australia having completed similar exercises in more than four years, did the CBDT need more time?
“The process was started and completed within the time given to us, so there is no question any longer of whether we would have preferred more time to do it,” Mr. Parbat said. “It was a mammoth task that involved 75,000 man-hours, so whether you put it in two years or six months, that is the amount of work that was needed.”
Published – August 31, 2025 03:26 pm IST
