Editorial: India's Tax Simplification Is Working. It Should Not Stop Halfway

This is an editorial and reflects the opinion of Nabh24.

For decades, Indian taxpayers have complained less about how much tax they pay than about how hard it is to work out. The past year has offered a welcome change, and the case for pressing on is strong.

What has changed

The Income-tax Act, 2025 came into force on 1 April 2026, replacing a 1961 law that had grown through decades of amendments. According to the Income Tax Department, the new Act has 536 sections and 16 schedules against 819 sections in the old law, with provisos and explanations folded into plain tables and formulas. The new statute largely reorganises and simplifies the law rather than rewriting tax rates.

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On the indirect side, the GST Council's reforms took effect on 22 September 2025. Most goods now fall into two main slabs of 5% and 18%, with a 40% rate reserved for a small set of luxury and sin goods. Many daily-use items moved to lower rates, according to the government's explainer.

Why it should continue

Simplicity is not a luxury. Every unclear provision invites a dispute, and disputes lock up money and time for both citizens and the state. A shorter statute and fewer GST classifications reduce the room for argument over which rate applies. Small traders, who cannot afford full-time tax advisers, gain the most.

Simpler systems also improve compliance. When people understand a rule, they are more likely to follow it, which can widen the base over time and allow rates to stay moderate.

The guardrails

Reform should not become constant change. Businesses plan around stable rules, so the government should avoid frequent mid-year tweaks. States, which depend heavily on GST, need predictable revenue and a real voice in the Council. And the transition from the old Act must be smooth: taxpayers with pending assessments or appeals deserve clear guidance, not confusion.

There are open questions too. Tax administration still needs faster refunds, better-trained officers and grievance systems that respond in days, not months.

Our view

The direction is right. The next phase should focus on implementation: clear forms, consistent rulings and fewer surprises. A tax system that an ordinary citizen can understand is a public good worth finishing.