Replying to the debate, finance minister Nirmala Sitharaman said the Finance Bill aims to reduce litigation and the compliance burden on small taxpayers and businesses, giving them the opportunity to make a greater contribution to the economy. She added that a simplified income tax law, which takes effect in April, will further ease compliance. The Rajya Sabha will discuss the Finance Bill on Friday.
The amendments also classify certain approvals by tax officials as administrative and provide that procedural defects in notices or orders-including the absence of a document identification number (DIN)-will no longer invalidate proceedings, ensuring that such lapses do not weaken enforcement actions. To balance enforcement, the bill mandates a minimum 30-day window for taxpayers to respond to reassessment notices, removes arrest provisions for non-payment of tax dues, and allows recovery to continue through attachment of assets. It also eliminates interest on penalties for misreporting under Section 270A and requires Income Tax Appellate Tribunal (ITAT) orders to be uploaded on the tax portal for faster implementation.Reform with Conviction
The finance minister said the government is moving forward with reforms not out of compulsion but conviction and clarity, adding that it has taken various steps to empower small businesses, farmers and cooperatives because they are at the heart of employment creation and overall development of the country. “We are facilitating first, enforcing later if necessary,” Sitharaman said in her reply to the debate on the Finance Bill, highlighting a broader shift toward easing compliance and trust-based tax administration.
She dismissed opposition criticism of the tax provisions as pro-business and that there was nothing for the middle class in the budget. “This Finance Bill has so much more for the middle class,” Sitharaman said.
She listed reduced tax collected at source on overseas education remittances and tour packages, as well as customs duty exemptions on life-saving drugs as relief for households.
Sitharaman also highlighted provisions allowing taxpayers to revise returns after reassessment begins, calling it a reform that “makes lives easier for the taxpayer.”
She added that small taxpayers could disclose previously undeclared foreign assets without prosecution under a new scheme.
Defending the indirect tax policy, Sitharaman said recent GST rate cuts had boosted consumption, citing “the highest ever” rise in passenger vehicle sales in February at 26.1%, and strong rural demand.
She also backed tax breaks for data centres, saying this would drive domestic investment and job creation.
Tax experts said introduction of a flat 12% surcharge on buyback-related capital gains reduces the levy for high-income cases previously taxed at 15% but increases the liability for smaller shareholders.
“This would significantly raise their effective tax cost, especially since earlier there was no surcharge on taxable income up to ₹50 lakh and 10% on taxable income between ₹50 lakhs to ₹1 crore,” said Sandeepp Jhunjhunwala, M&A tax partner at Nangia Global Advisors.