India’s direct tax authority after feedback from the public on revamping the six-decade-old Income Tax Act as it’s easier to comprehend and comply with, while reducing the scope for disputes and erasing red tape.
Central Board of Direct Taxes (CBDT) said in a statement that an internal committee set up to review the Income Tax Act has sought public feedback on four categories:
- Simplification of language,
- Litigation reduction,
- Compliance reduction,
- Redundant/obsolete provisions.
Government intends to make the tax law less complicate while at the same time improving the ease of doing business and removing sections that have lost their relevance.
The Income Tax Act has 298 sections arrange in 23 chapters with 14 schedules.
Public feedback will allow the government to align the propose revamp of the tax laws with industry expectations.
CBDT said the income tax department’s website will accept suggestions from 13th October 2024.
This will give the government enough time to draft a Bill by the next budget session, in February 2025.
In the past, when the government examine the need for a direct tax code, key suggestions were incorporate into the Income Tax Act itself rather than into a new tax code.
Adv Ashish Mishra, Founder of DailyTax Said :
“The focus should be on simplification and removing outdated clauses and sections. Reducing litigation and compliance burden on taxpayers is another area which should be looked into. It is easy for the taxpayers to participate in this process as the suggestions can be submitted online,”
Referring to FM Nirmala Sitharaman’s budget announcement on the tax law revamp, CBDT said its goal was to make the law concise, clear, and easy to understand, which will reduce disputes, litigation, and provide greater tax certainty to taxpayers.
Crowdsourcing of ideas is aim at addressing the practical challenges face by taxpayers, accountants, and legal professionals, ensuring that their real-world experience will help shape the reforms.
By inviting inputs on the four specified areas, the government aims to make the tax system more efficient and user-friendly, ensuring long-term benefits for all stakeholders.
Reducing litigation has a priority for the government as often high-pitch assessments end up in courts, which take up resources and time but result in limited recovery of alleged dues.
This leads to large amounts being classified as tax arrears, which are difficult to recover and pose a headache to the government.
Over many years, the tax department has raise the monetary threshold for filing appeals in higher courts to reduce litigation.
In the Union budget for 2024-25, the government raise the monetary limit for filing appeals related to direct taxes, excise duty and service tax in the tax tribunals, high courts and the Supreme Court.
