Finance Minister Nirmala Sitharaman in her July Budget had announced a comprehensive review of the six-decade old Income Tax Act, 1961, within six months.
The government is expected to introduce a new income tax bill during the upcoming Budget session of Parliament, aimed at simplifying the current tax law, making it more understandable, and reducing its length by approximately 60 percent, PTI reported.
Finance Minister Nirmala Sitharaman is likely to propose a new direct tax law, focusing on simplifying regulations, removing redundant provisions, and making the language more accessible to the general public, the report showed. The committee working on the revisions is considering whether the new law, set to replace the 63-year-old Income Tax Act, should be divided into two or possibly three parts, according to sources.
While the government had planned to release the draft law for public comment, it has opted to introduce the bill directly, sending a strong message amid criticism of the complexity of existing tax laws. The bill will then be open to adjustments based on feedback from taxpayers and experts.
As a result, officials from the finance ministry and the PMO have worked closely with the panel over the last six to eight weeks to ensure that the budget is ready by the time it is presented.
Sitharaman, who announced the plan in the July Budget, is anticipated to reference the legislation in her speech on February 1, but it is unclear if the law will be introduced in the first or second part of the session. This is at least the third attempt to amend the Income Tax Act since the Direct Tax Code bill was tabled in Parliament in 2010. As a result, the Modi government formed an expert panel, the reports of which were not made public, and the recommendations were mostly ignored. The committee has been urged to guarantee that “provisos” in law, which number in the hundreds, are deleted from new legislation.
Similarly, numerous sections are being omitted because they have become redundant as those clauses have been removed from the IT Act over time. “The language itself can be difficult to understand for the common man and the committee has been asked to make it as simple as possible,” sources told PTI. However, the government is not yet including new issues in the proposed legislation. Officials warned, however, that a change in language may lead to litigation because taxpayers would desire a new interpretation in some circumstances.
With inputs from PTI