The first draft of a new simplified income tax law, as proposed in the Budget, will be prepared by an internal committee of the tax department and will undertake stakeholder consultation before finalising the legislation, Revenue Secretary Sanjay Malhotra said on Thursday.

Malhotra said that the exercise is not linked to bringing a new direct taxes code, but a comprehensive review of the income tax law.

Finance Minister Nirmala Sitharaman in her Budget speech earlier this week announced that a comprehensive review of the Income-tax Act, 1961 will be completed in six months.

"The purpose is to make the Act concise, lucid, easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers. It will also bring down the demand embroiled in litigation," Sitharaman said.

To a question whether the review would mean that the government will come with a direct tax code, Malhotra said "It is not a new direct tax code... It is a comprehensive review".

He said the first draft of the simplified income tax law, post the review, would be prepared by an internal committee of the tax department.

"We would like to have a collaborative approach.... The first draft will be prepared by an internal team and then we will see how to go ahead with stakeholder consultation," Malhotra said at an interactive session with industry chamber Ficci.

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