A proposed revamp of the Income-tax Act of 1961 is currently being finalised and will likely be issued for public consultation around mid-January, according to people familiar with the matter, who asked not to be identified as the information isn’t public. The revised legislation will then be released in the government’s budget, expected in early February, they said.
The changes involve simplifying the language and rationalising information by using formulas and tables, and won’t include any adjustments to tax rates and policy, the people said.
The Finance Ministry didn’t immediately respond to an email seeking comment.
-
Also read: Kalyan Jewellers’ shares plunge 5% post Q3 results and expansion plans
India has been trying to modernise its tax laws for decades to reduce the bureaucratic burden on taxpayers and boost compliance. Tax disputes have more than doubled to 10.5 trillion rupees ($123 billion) in the decade through the fiscal year ended March 2023. Finance Minister Nirmala Sitharaman announced in July that a comprehensive review of the tax legislation will be completed in six months to make the rules more taxpayer-friendly.
Here are some of the proposed changes, according to people familiar with the discussions:
-
Complex income computation structures to be replaced by formulas
-
A single definition of tax year to replace the current practice of assessment year and financial year
-
Tabular depiction for identical taxpayers for easier understanding
-
Reducing the number of additional forms taxpayers need to submit with their tax returns and making them available online
