RAS question
The Union Budget 2025-26 proposed a new income tax bill to replace the existing Income Tax Act of which year?
Correct answer: (D) 1961.
The Union Budget 2025-26 proposal concerned replacing the Income-tax Act, 1961.
Explanation
The Act named in the Budget proposal was the Income-tax Act, 1961. Union Budget 2025-26 announced a new Income Tax Bill to replace that Act because repeated amendments over more than 60 years had made the law complex. The PIB Budget highlights support the purpose of the new bill: its text was to be clear and direct, so taxpayers and the tax administration could understand it more easily, with greater tax certainty and reduced litigation. India Code independently identifies the current statute as the Income-tax Act, 1961, so 1961 is the only year that fits the Budget proposal.
Why the other options are wrong
- (A) 1991 is wrong because the official statute identified by India Code is the Income-tax Act, 1961, and no Income Tax Act of 1991 was the target of the Union Budget 2025-26 replacement proposal.
- (B) 1971 is wrong because the Budget proposal was about replacing the existing Income-tax Act, 1961, not a 1971 law.
- (C) 1951 is wrong because the current Act identified by India Code is from 1961, not 1951.
Concept
Direct-tax changes under Union Budget and fiscal policy are a recurring Indian Economy area in RAS. Aspirants need to link a Budget announcement to the exact statute it seeks to amend or replace.