Overhaul of Income Tax Laws: A Step Towards Simplicity and Transparency

The Income Tax (I-T) department has set up an internal committee to review and modernize the Income-tax Act of 1961, with the aim of simplifying and streamlining India’s tax framework. This initiative focuses on four key areas: simplifying the language of the Act, reducing litigation, easing compliance requirements, and eliminating outdated provisions. As part of this process, the Central Board of Direct Taxes (CBDT) has launched an online platform for public participation, where individuals can submit suggestions related to specific sections, sub-sections, clauses, rules, and forms of the Income-tax Act and Rules. To ensure security, users will be required to authenticate their mobile numbers via OTP.

This review is significant given the complexity of the current Income-tax Act, which includes 298 sections, 14 schedules, and 23 chapters. The government aims to create a clearer, more efficient tax system, with simplified language that reduces confusion and legal disputes. The review follows Finance Minister Nirmala Sitharaman’s announcement in the 2024-25 Union Budget, where she emphasized the need for a concise, transparent, and user-friendly tax system. The committee is expected to complete its review within six months, with revised tax laws potentially introduced during the Budget session of Parliament in January 2025.

This review follows ongoing efforts to reform India’s tax system, including the introduction of the Direct Taxes Code (DTC) in 2009 and earlier proposals for a new tax law. The current review is designed to be more systematic and inclusive, incorporating public input to better meet the needs of modern taxpayers. In addition to reviewing the Income-tax Act, the 2024-25 Union Budget proposes key tax reforms, including changes to charitable organization provisions, TDS rates, capital gains taxation, and reassessments.

The government’s push for reform underscores its commitment to creating a transparent, efficient, and modern tax system that serves both the taxpayer and the nation’s fiscal needs.