Lok Sabha Passes Income Tax (No 2) Bill – All About the 'S.I.M.P.L.E' Reform

 

Lok Sabha Approves Income Tax (No 2) Bill: Key Points of the 'S.I.M.P.L.E' Reform

Introduction

In a landmark decision, the Lok Sabha approved the Income Tax (No 2) Bill to replace the decades-old tax laws with a more taxpayer-friendly framework called the ‘S.I.M.P.L.E’ reform. This reform aims to simplify the tax system, reduce disputes, and speed up refunds, especially benefiting middle-income earners and small businesses.

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What is the 'S.I.M.P.L.E' Reform?

The reform acronym stands for:

• Simplification of tax procedures
• Incentives for compliance
• Minimum taxpayer-government interaction
• Promoting digital & transparent processes
• Lowering tax burden for middle class
• Efficiency in tax administration

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Key Benefits

• Simplified language & rules for easy understanding
• Faster income tax refunds within days
• No penalty for delayed TDS filing
• Enhanced definitions for MSMEs and capital assets
• Clarity on deductions including property income and pensions

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Old vs New Income Tax Slabs Comparison

Income Range (₹)	Old Tax Regime (%)	New Tax Regime (%)
Up to 2,50,000	Nil	Nil
2,50,001 – 5,00,000	5%	5%
5,00,001 – 7,50,000	10%	10%
7,50,001 – 10,00,000	15%	15%
10,00,001 – 12,50,000	20%	20%
12,50,001 – 15,00,000	25%	25%
Above 15,00,000	30%	30%

Note: Taxpayers can choose between the old and new tax regimes based on which suits them best.

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Frequently Asked Questions (FAQs)

Q1: When will the Income Tax (No 2) Bill become effective?
The bill will come into force from April 1, 2026, after official notification.

Q2: Does the new law change tax slabs?
No major changes in tax slabs, but processes and compliance have been simplified.

Q3: How will MSMEs benefit?
The bill clarifies MSME definitions and eases compliance with fewer litigations.

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Conclusion

The Lok Sabha’s approval of the Income Tax (No 2) Bill marks a big step towards a clearer, faster, and more taxpayer-friendly taxation system. The ‘S.I.M.P.L.E’ reform promises transparency, efficiency, and ease of compliance, which can boost economic growth and widen the tax base in India.

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