S.T.R.E.A.M lined TAX Framework to take India safely across all TARIFF hits- A gift from our FM for India's 79th Independence Day?

 

Indian Parliament Amends the Income-tax Act, 1961: Understanding it through STREAM Tax Modernization Framework

In a significant move towards modernizing India's tax system, the Indian Parliament has passed an amendment to the Income-tax Act, 1961. Introduced by the Finance Minister, the bill seeks to streamline compliance, promote fairness, and align India's taxation framework with global best practices. The reforms emphasize simplification, rationalization, and digital integration, ensuring the system remains robust yet taxpayer-friendly. The bill is awaiting President's consent

The S.T.R.E.A.M. Tax Modernization Framework

The amendment’s essence can be captured in the S.T.R.E.A.M. framework—a structured approach to tax modernization:

S — Simplify: structures for compliance and filing, reducing procedural complexity and paperwork.

T — Target: exemptions and incentives to sectors and taxpayers where they can yield the most economic impact.

R — Rationalize: tax rates to balance revenue needs with fairness and economic growth.

E — Enhance: enforcement and anti-evasion measures through data analytics and AI-driven systems.

A — Align: India’s tax policies with international standards, including BEPS norms.

M — Mobilize: revenue efficiently for developmental and social priorities.

Implications for Stakeholders

For taxpayers, the S.T.R.E.A.M. framework promises the current move by FM to be  a more transparent and predictable tax environment. For the government, it ensures stronger revenue streams while fostering voluntary compliance. Businesses can expect reduced compliance burdens and a more competitive investment climate.

STREAM Dimension Comparison 1961-2025

STREAM Dimension	1961 Snapshot	2025 Snapshot	Achievement (Replacement of Previous Year’s Record)	Verdict

 

S – Simplify Structures for compliance & filing

The Income Tax Act 1961 in force; paper-based filing; in-person assessments; multiple indirect taxes (excise, sales tax, octroi, etc.)

Fully digital filing; AIS/TIS prefill; faceless assessments; GST replacing multiple indirect taxes; Income Tax Bill 2025 to replace the 1961 Act with plainer drafting

2025 marks first complete legislative overhaul of the 1961 Act in 64 years, replacing it with a modern code

2025 ≫ 1961

 

T – Target Exemptions & incentives to priority sectors

Broad, numerous exemptions and deductions; complex compliance; incentives embedded deeply in code

Limited, sunset-based incentives; new tax regime with minimal deductions; time-bound 15% concessional corporate rate for manufacturing

In FY25, corporate tax incentive sunset clauses extended selectively, replacing blanket schemes of earlier years

2025 > 1961

 

R – Rationalize Tax rates for fairness & growth

Very high personal tax rates (up to ~97.5% in 1970s); complex slabs; high corporate rates

New personal tax regime: capped surcharge; corporate tax at 22% (domestic), 15% for new manufacturing

FY25’s personal surcharge cut replaces FY24’s higher surcharge rate, lowering top effective rates

2025 ≫ 1961

 

E – Enhance Enforcement & anti-evasion

Manual scrutiny; weak information systems; high evasion

AIS/TIS; faceless assessment; GST e-invoicing; data analytics & AI-driven risk profiling

FY25’s 30-day GST e-invoice reporting mandate replaces earlier 7-day and no-limit structures for high AATO taxpayers

2025 ≫ 1961

 

A – Align With global standards (BEPS, MLI)

No BEPS/MLI; limited treaty scope; minimal digital economy coverage

BEPS MLI signed; GAAR, POEM, SEP; Equalisation Levy introduced and now being rolled back in line with Pillar 1

FY25 scraps 2% EL and 6% digital ad levy, replacing FY20’s digital taxation regime

2025 ≫ 1961

 

M – Mobilize Revenue for development

Tax-to-GDP ~8%; narrow base; low buoyancy

Tax-to-GDP projected ~12%; record GST & direct tax collections; strong compliance base

Apr 2025 GST of ₹2.37 lakh crore replaces Apr 2024’s ₹2.10 lakh crore record; Advance tax collections at all-time high

2025 > 1961

Conclusion

The amendment to the Income-tax Act, 1961 marks a pivotal step in India's journey towards a modern, globally aligned, and citizen-friendly tax regime. Through the S.T.R.E.A.M. framework, we try to understand how  the government has signaled its commitment to balancing revenue generation with economic growth and taxpayer ease.