New Delhi: Finance Minister Nirmala Sitharaman announced that a new Direct Tax Code (DTC) will be introduced next week to simplify tax compliance and reduce litigation. Presenting the Union Budget 2025, she stated that the new law will be easier to understand and offer relief to taxpayers.
One of the biggest highlights is the tax exemption up to Rs 12 lakh and up to Rs 12.75 lakh with standard deductions under the new tax regime. This move is expected to benefit millions of taxpayers across India.
Sources earlier indicated that the new income tax code was in discussion since July 2024, with a key goal of making tax laws more accessible by reducing the 1961 Income Tax Act’s length by 60%. The 1961 Act contains 23 chapters and 298 sections, making it complex for taxpayers.
The new DTC may also eliminate financial and assessment years, introduce a 5% tax on LIC policy earnings, and allow company secretaries and cost management accountants to conduct tax audits. Additionally, capital gains tax may be streamlined, and a standard 15% tax on dividends may be introduced.
With over 7,000 public recommendations received, the new Direct Tax Code aims to create a fair, simplified, and transparent tax system.
