Income tax simplification hopes rise as feedback process nears rollout;
Budget 2025 may bring big news on direct tax laws
Sep 29, 2024
Synopsis
The govt will invite suggestions from the private sector and tax experts on the Income Tax Act, 1961, starting October. This initiative aims to simplify the direct tax law by reducing outdated clauses and mitigating litigation. The amended Act is expected to be presented in the Budget session of Parliament in early 2025.
Income Tax reform: Expectations are rising that India might finally see the long-awaited simplification of its direct tax laws in the coming budget. According to reports, Modi government is about to start the feedback process involving the private sector and tax experts on the Income Tax Act, 1961, starting in October. This initiative aims to simplify the existing direct tax laws.
At a recent meeting with industry chambers, the government announced the development of a new feature on the Income Tax portal. This will allow stakeholders to offer suggestions on various sections of the Income Tax Act, intending to simplify the language and reduce legal disputes.
The idea is to ensure that India's tax laws are more straightforward and less prone to litigation.
Earlier this year, the Central Board of Direct Taxes (CBDT) formed an internal committee to thoroughly review the six-decade-old tax law. The committee's goal is to make the law more concise and easier to understand.
"In the meeting with industry associations, the revenue department suggested that the functionality be developed by the first week of October to give suggestions for reworking the income tax law," a source said.
The source clarified that the objective is not to create a new tax law but to update the existing one. "Just by removing the outdated clauses, the number of pages could be brought down by about 100. The aim of the I-T law review is simplification of language and mitigation of litigation," the source added.
Finance Minister Nirmala Sitharaman announced in the 2024-25 Budget that this review would be completed in six months. The timeline indicates that the revised Income Tax Act may be introduced in the Budget session of Parliament early next year.
Another source mentioned that the amended Act could be included in the Finance Bill, 2025, and that the first draft would incorporate suggestions from the industry. "It could be that the revenue department is looking at incorporating the amendments suggested by the industry in the first draft and then put the amended draft law in public domain," said the source.
[The Economic Times]
