The Central Board of Direct Taxes (CBDT) has formed a committee to review the Income Tax Act, 1961, following the Union Budget 2024-25 announcement by Finance Minister Nirmala Sitharaman. This committee, chaired by Mr. V K Gupta, Chief Commissioner of Income Tax, aims to rationalize and simplify the Act without making major procedural or tax rate changes. The goal is to make the Act more concise, clear, and user-friendly, thereby reducing disputes and litigation and providing greater tax certainty.
- Simplification of Language: Making the language of the Act easier to understand.
- Litigation Reduction: Reducing the scope for disputes and litigation.
- Compliance Reduction: Simplifying compliance requirements for taxpayers.
- Elimination of Redundant/Obsolete Provisions: Removing outdated provisions to streamline the Act.
The committee has invited public inputs and suggestions in the above four categories. A dedicated webpage has been launched on the e-filing portal for this purpose, accessible here. Stakeholders can submit their suggestions by specifying the relevant provisions of the Income Tax Act or Rules.
- Abridged Version for Small Taxpayers: Introducing a simplified version of the Act for small taxpayers.
- Removal of Provisos: Subsuming provisos into the main sections to simplify the language.
- Consistent Interpretation: Ensuring the department has a consistent view on provisions.
- Tax Holidays and Sunset Clauses: Minimizing these to simplify the tax structure.
- Mediation Machinery: Establishing mediation with retired officers and independent professionals.
- Decriminalization: Reducing criminal penalties for tax offenses.
- Faceless Assessments: Addressing concerns related to faceless assessments.
- Surcharge and Education Cess: Subsuming these into the main tax rate.
- Comprehensive Form 3CD: Making Form 3CD a comprehensive certificate for multiple purposes.
- Illustrations in Sections: Including examples to clarify specific situations.
- Harmonization of Definitions: Aligning definitions with other related Acts.
- Periodic Commentary: Publishing regular updates and commentaries, similar to OECD practices.
- Rationalization of TDS Provisions: Simplifying TDS rules.
- Streamlined Coordination: Improving coordination between CPC and Assessing Officers.
- Highlighting Litigation Sources: Identifying major sources of litigation.
- Utility for Small Taxpayers: Developing a utility with important provisions and information for small taxpayers.
This comprehensive review aims to make the Income Tax Act more efficient and user-friendly, benefiting all taxpayers.
