New I-T Act to ease compliance for small taxpayers: FM Nirmala Sitharaman
New Delhi, Mar 20, 2026
Finance Minister says expanded presumptive taxation and simplified provisions under the new law will reduce compliance burden and litigation for small businesses and professionals
The new Income-tax Act, 2025 will bring significant relief for small business owners and professionals through expanded presumptive taxation, Finance Minister Nirmala Sitharaman said on Friday, while stressing that litigation must come down under the new framework.
Speaking at the launch of the nationwide awareness campaign “PRARAMBH 2026”, Sitharaman said India’s small business owners and professionals are “really the engine of our economy”, and under the new Act, businesses with turnover up to ₹10 crore, subject to conditions, will be exempt from maintaining detailed books and undergoing audit.
“This should come as a big relief,” she said. She also said that issues such as pre-construction interest on housing loans, which were earlier a matter of dispute, have now been clearly provided for under the new law.
The minister underscored that reducing litigation must be a key outcome of the new Act. “Every case that goes to a tribunal is a failure on our part,” she said.
She said the new law is designed to lower errors, disputes and compliance costs, and to shift behaviour “from confusion to compliance”.
The Act is also expected to reduce the need for interpretation and court intervention by making provisions less ambiguous and easier to understand.
Alongside the rollout, the government launched the Income Tax Website 2.0 and a nationwide outreach campaign.
Sitharaman said digital platforms have been put in place so that taxpayers can “ask questions, communicate, and file”, while officials have been directed to reach beyond metros and engage with different sections of society, including students.
“You are not just passing laws… you are the face of the government’s relationship with the taxpayer,” she said.
The minister said the new Act replaces the Income-tax Act, 1961, which had become complex after over 4,000 amendments across decades.
The new law reduces sections from about 819 to 536, chapters from 47 to 23, and cuts the length from 5.12 lakh words to about 2.6 lakh words. It also removes the distinction between “previous year” and “assessment year”, introducing a single tax year. “When you give people simplicity, they embrace it,” she said.
The legislation was prepared in about six months, involving nearly 7,000 person-hours, and was examined by a Select Committee of Parliament, which made 196 recommendations, of which 194 were accepted. Calling for a change in approach, Sitharaman said tax officials must adopt a more facilitative role.
“The taxpayer is not your adversary. The taxpayer is your partner in nation building,” she said.
She also cautioned against making the new law complex over time, noting that the 1961 Act had similarly expanded through repeated amendments.
[The Business Standard]
