Editorial 1: Little has changed in the Income-Tax Bill, 2025

Context

Despite its purported objective of clearing the fog, the Bill does little to make the law more accessible to the common taxpayer.

Introduction

In February this year, the Union Finance Minister introduced the Income-Tax Bill, 2025, in Parliament. If enacted, the legislation will replace the Income-Tax Act, 1961, and, according to the government, will simplify the law for both taxpayers and administrators alike.

Tax Law Reform and Clarity Concerns

Government’s stance: The current law, of 1961, the government claims, has become unwieldy and unclear not only for the common person but also for professionals, littered as it is with provisos, exceptions, and non-obstante clauses.
- The newly designed draft purports to clear the fog and foster greater certainty in taxation, with a view to reducing litigation and creating a fairer, more predictable tax environment.
Concerns over the Bill: There can be little doubt that these are worthy causes to pursue.
- But a reading of the Bill shows that behind the cosmetic and structural alterations, little else will change.
- Many of the complexities and ambiguities that plague the current legislation remain unbroken.
- And, in some areas, the Bill seeks to make into law a set of powers that are troublingly authoritarian, even more so than what the present, already severe, legislation permits.
Global legislative trends: Jurisdictions across the world have tried to move towards legislative drafting that promotes the use of plain language.
- The underlying idea is that laws should be more accessible to the broader public, thereby enhancing transparency and making governments more accountable.
Debate on clarity vs. precision: Some critics argue that plain language and precision do not always go hand in hand.
- That the technicality of legalese ensures greater accuracy and specificity.
- That a quest for clarity can at times come at the cost of exactness.
- However, global examples have shown that simplifying legal language is not necessarily detrimental to accuracy.
- In fact, clearer laws can help eliminate confusion, improve compliance, and ultimately reduce litigation.

Complex and knotty text

Critique of the Tax Bill’s Language and Approach

Failure to Simplify the Law:
- The Bill, despite its vaunted objective, scarcely embraces this approach.
- It continues to rely on dense and convoluted text, doing little to make the law more accessible to the common taxpayer.
- For instance, we are led to believe that the replacement of the phrase “notwithstanding anything contained to the contrary…” with “irrespective of anything to the contrary” will help simplify the law.
Ambiguity in Legal Terminology:
- The use of the term “notwithstanding” denotes what lawyers describe as a “non-obstante” clause, with a rich legal history.
- In theory, the word “irrespective” ought to now be accorded the same meaning.
- However, it is hard to comprehend how this change helps unravel the law to the everyday taxpayer.
No Fundamental Change in Policy:
- Fiscal laws are not the easiest to draft in simple terms.
- The Bill’s failure here emanates at least partly from the absence of any change in government policy.
- The state’s approach to taxation remains what it has been for years.
- In the absence of any fundamental adjustment in the law’s basic thrust, the draft winds up akin to something of a manual or digest, merely a more concise guide to the existing 1961 law.
Minor Improvements vs. Complete Overhaul:
- The Bill does seek to remove a few outdated redundancies in the prevailing statute.
- Some definitions have been made crisper, and a few timelines and compliance requirements have been consolidated into tables and schedules.
- However, all of this could have been achieved through amendments rather than a complete overhaul of the statute.
Continued Complexity and Litigation:
- Despite its efforts, the Bill’s provisions continue to perplex.
- The mere shifting of timelines from clauses to tables and schedules does not eliminate the law’s inherently litigious nature.
- This is especially true when those tables include cross-references to other sections of the Act.

Cosmetic alterations

Incorporation of Old Provisions: Despite its intended repeal, the new law will still incorporate by reference some clauses from the existing legislation.
- For example, the term “income” is defined under Section 2(49) to include profits, dividends, allowances, and everything covered under Section 2(24) of the present law.
- If a definition needs reference to the old legislation, one might well wonder what we are really gainingfrom this exercise.
Reopening Settled Legal Debates: Bringing about textual alterations without altering the statute’s basic philosophy presents another problem.
- Since 1961, courts have rigorously interpreted the law, clarifying it for taxpayers.
- Changes made through the Bill may reopen settled debates, subjecting the same provisions to renewed interpretation.
- The result might well be more litigation and less certainty.
Issues in Reassessments: One of the more heavily contested areas under the Act has been the power of income-tax authorities to reopen completed assessments.
- Until April 2021, the Revenue could make reassessments only if it had “reason to believe” that income had escaped tax—leading to endless court battles.
- The law was then changed to allow reassessments where authorities had “information” suggesting income had escaped assessment.
- The term “information” was defined to include, among other things, data obtained through a “risk management strategy” framed by the Central Board of Direct Taxes.
- However, in a law brimming with definitions, “risk management strategy” remained undefined.
Failure to Address Litigation Risks: Some of these gaps have already been addressed by the courts, but delegating critical power to the executive has opened the door to potential abuse.
- The Bill does little to filter this provision and instead adopts the existing text and rearranges its structure.
- It is difficult to see how this approach will alleviate litigation.

The point of search and seizure

Expansion of Search and Seizure Powers: The current law grants to the taxman enormous police power to search persons and their properties, and seizegoods found during a search.
- Although this authority has been upheld by the courts previously, its validity following the Supreme Court of India’s judgment in Justice K.S. Puttaswamy vs Union of India (2017), where the fundamental right to privacywas affirmed, is suspect.
Extension to Digital Domains: Rather than addressing this concern, the Bill extends the power of search into new domains.
- It does so by allowing officials to inspect “any information stored in an electronic media or computer system.”
- A computer system is defined widely to include all manners of data storage and what is described as a “virtual digital space” — among other things, email servers, social media accounts, and digital application platforms.
- Should a taxpayer deny access to these spaces, the authorities can now override access codes to enter the system.
Departure from Existing Law: In sanctioning this, the Bill marks a significant departure from the law as it stands, which does not explicitly permit digital intrusions.
- Until now, officers have still been demanding access to laptops and hard disks, although it could be contendedthat these directions are in breach of the law.
- But if the Bill is enacted, officials, in furtherance of a search, can legitimately trawl through emails and messages received and sent on Gmail, X, Instagram, and every other such platform.
Risks to Privacy and Lack of Oversight: In times where digital communication is so deeply integrated into both professional and personal life, to permit government easy access to intimate and sensitive data is fraught with danger.
- The Bill offers no judicial oversight over these powers.
- To the contrary, it enables authorities to keep to themselves the reasons undergirding a search.

Conclusion

When the Select Committee of the Lok Sabha scrutinises the Bill, it may well find that this is an exercise best shelved. Rather than a sweeping effort at repeal and reenactment, we may be better served if Parliament can tidy up some of the misgivings in the present law and rid it of its more draconian commands.

Editorial 2: Remodelling the UAE-India aviation partnership

Context

Beyond revisiting the regulatory frameworks, the UAE can support India’s ambition to become a global aviation powerhouse

Introduction

During a recent tour of the Navi Mumbai International Airport in Maharashtra, I was left deeply impressed by the scale of India’s aviation ambitions. Navi Mumbai International Airport has the potential to serve as a game-changer in taking India’s aviation sector to exciting new heights, providing new avenues for the Indian travelling public to benefit from an increasingly inter-connected world. As the pace of growth in India’s aviation sector — it is already the world’s third-largest domestic market in terms of passenger numbers — continues to quicken and the Government of India’s initiatives such as the Ude Desh Ka Aam Nagrik (UDAN) airport scheme are rapidly implemented, it is essential that an equally visionary approach to regulation and international partnerships is also considered.

The UAE as a vital travel destination

For decades, the United Arab Emirates (UAE) has proven itself to be a close strategic partner and friend to India.
Today, the UAE is India’s most significant outbound travel market, with over 4.5 million Indian tourists visiting the UAE in 2023.
Every week, Indian carriers fly over 600 times to the UAE, while UAE carriers operate over 500 weekly services to India.
On the surface, these numbers appear significant. However, they are far below meeting current, let alone, future consumer demand.
The impact of what is effectively a mismatch between supply and demand has directly contributed to spiralling ticket prices and a lack of choice for the UAE and Indian travelling public alike.
Under current bilateral air service arrangements, the UAE’s carriers are limited to operating to a total of only 15 Indian cities, thus having no choice but to ignore the consistent demands of key Indian growth centres, including Surat, Visakhapatnam, Indore, Tiruchirappalli, and Patna to operate services.
Similarly, Indian carriers are unable to increase their level of frequencies to Dubai, despite unprecedented interest from Indians to visit family and engage in business and leisure activities in this vital global hub.

The benefits of a modernised strategy

With estimates suggesting that for every 1% increase in Indian passport holders, a further 10 million Indians will seek to travel overseas, this situation will only grow more acute.
Restrictive bilateral regulations will contribute to further increases in the price of airline tickets, limit the ability of Indian citizens to travel abroad, and potentially inhibit the advancement of broader UAE-India investment, trade, and economic partnerships.
Just as the UAE and India have expanded cooperation through trade agreements such as the Comprehensive Economic Partnership Agreement (CEPA), there is an urgent need for a more progressive and open approach on aviation.
A modernised aviation strategy will act as an economic multiplier, drive investment, and ensure that our aviation partnership can become a key pillar of regional and international connectivity and growth.
Beyond revisiting the regulatory frameworks that guide our aviation relationship, the UAE is keen to supportIndia’s ambition to become a global aviation powerhouse through new investments and partnerships.
Whether this support is in the form of:
- Knowledge-sharing and the training of Indian pilots
- Partnering in India’s rapidly emerging aviation maintenance, repair, and overhaul (MRO) industry
- Promoting India’s globally renowned tourism sector
- Investing in the Indian government’s UDAN airport scheme to better connect Tier-2 and Tier-3 Indian cities
- Achieving win-win outcomes for our respective airline carriers
It is imperative that we seek new areas of collaboration in this critically important sector.

Cooperation over competition

Fundamentally, an opportunity exists to establish a combined sky and aviation eco-system that privileges cooperation over competition.
Through greater engagement, we can ensure that the respective aviation sectors of both our countries are able to grow and succeed, whilst offering the citizens of the UAE and India the ability to connect, engage, and thrive.
Just as Dubai and Abu Dhabi benefit from their status as global aviation hubs, cities throughout India have the potential to attain similar levels of seamless connectivity.
By better connecting and supporting the aviation ambitions of emerging Indian cities, we can together ensure that inclusive and sustainable economic growth is felt not only within India but also far beyond its borders.