Indian government mulls impact of US ‘reciprocal tariffs’

India’s government has said that it is examining the implications of the ‘reciprocal tariffs’ announced by the United States, which has imposed a baseline duty of 10%, effective from 5 April 2025. A remaining country-specific ad valorem duty of 27% became effective on 9 April 2025.

The Ministry of Commerce and Industry said it is engaging with all stakeholders, including Indian industry and exporters, collecting feedback on their assessment of the tariffs and assessing the situation.

“The Department is also studying the opportunities that may arise due to this new development in the US trade policy,” it said in a press statement.

Referring to Prime Minister Narendra Modi and US president Donald Trump’s February announcement on ‘Mission 500’ – aiming to more than double the bilateral trade to $500 billion by 2030 – the commerce ministry said discussions are ongoing between Indian and US trade teams for the conclusion of a mutually beneficial, multi-sectoral Bilateral Trade Agreement.

“These cover a wide range of issues of mutual interest including deepening supply chain integration. The ongoing talks are focused on enabling both nations to grow trade, investments and technology transfers. We remain in touch with the Trump Administration on these issues and expect to take them forward in the coming days,” it said.

The ministry statement added that “India values its Comprehensive Global Strategic Partnership with the United States”, and is committed to implement the India-US ‘Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology’ (COMPACT) agreement, to ensure that trade ties remain a pillar of mutual prosperity and drive change for the benefit of the people of India and the US.

New Income Tax Bill gets approval

India’s Union Cabinet has approved the New Income Tax Bill, which is set to replace the six-decade-old Income Tax Act, news agency PTI has reported.

The new legislation aims to make direct tax laws simpler and easier to understand, while ensuring that no additional tax burden is imposed on taxpayers. According to sources, the bill seeks to eliminate complex provisos, explanations and lengthy sentences, making the tax structure more transparent and accessible. The proposal was approved during a Cabinet meeting chaired by Prime Minister Narendra Modi, the news agency reported.

The New Income Tax Bill is expected to be introduced in the Parliament later this month and would be sent to Parliament’s Standing Committee on Finance.

Finance Minister Nirmala Sitharaman had announced in Budget 2025-26 that the new tax bill will be introduced in the ongoing session of Parliament. Sitharaman had first announced a comprehensive review of the Income-tax Act, 1961 in July 2024 Budget.

India’s Central Board of Direct Taxes (CBDT) had set up an internal committee to oversee the review and make the Act concise, clear, and easy to understand, which will reduce disputes, litigations, and provide greater tax certainty to taxpayers.

Also, 22 specialised sub-committees have been established to review the various aspects of the Income Tax Act. Public inputs and suggestions were invited in four categories – simplification of language, litigation reduction, compliance reduction, and redundant/obsolete provisions. The income tax department has received 6,500 suggestions from stakeholders on the review of the Income Tax Act.

PTI reported that the new law is expected to be leaner and more reader-friendly. It said the intention of the government is to halve the volume and make the language simpler, so that taxpayers can know their exact tax liability. It said it “would also help in reducing litigation and thereby cut down on disputed tax demands. Income tax law was enacted about 60 years ago in 1961 and since then a lot of changes have taken place in the society, in the way people earn money and companies do business.”