Identify the major direct tax reforms in the Income Tax Bill, 2025 and explain their impact on India’s investment climate. Highlight how the Bill’s simplification measures can improve compliance. Propose steps to balance ease of doing business with revenue needs.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Q5. Identify the major direct tax reforms in the Income Tax Bill, 2025 and explain their impact on India’s investment climate. Highlight how the Bill’s simplification measures can improve compliance. Propose steps to balance ease of doing business with revenue needs. (15 M)

Difficulty Level: Medium

Reference: TH

Why the question
Revised Income Tax Bill introduced and passed in Lok Sabha without debate

Key demand of the question
The question asks to identify major direct tax reforms in the Bill, link them to investment climate effects, explain how simplification aids compliance, and suggest measures to balance ease of doing business with revenue generation.

Structure of the Answer:
Introduction

Briefly state the significance of the Bill as a structural reform in India’s direct tax framework.

Body

• Major reforms and impact on investment climate – highlight key provisions and their implications on investor confidence and capital inflow.
• Simplification and compliance – indicate how structural changes reduce disputes, improve transparency, and boost voluntary compliance.
• Balancing ease of doing business with revenue needs – outline policy, technological, and administrative safeguards to protect revenue while enabling business growth.

Conclusion

Conclude with a forward-looking line on aligning tax reforms with sustainable economic growth.