FM Calls For Simplifying Tax Law, Says India May See New Income Tax Act In 6 Months

Union Finance Minister Nirmala Sitharaman has said that the country may soon see a new income tax act that will help reduce litigations and simplify the language of the notices. Addressing the 165th anniversary of Income Tax Day observed by the Central Board of Direct Taxes (CBDT), the finance minister said on August 21, “Within 6 months there will be a new Tax Code or new Income tax act aimed at reducing litigation.” She urged the Income Tax (I-T) department to simplify the language of notices and further expedite the refund processes. Also Read: Sebi Receives 17,892 Complaints Against RIAs Since 2011; ‘Tips And Trading Calls’ Top Grievance: Report During the event, CBDT Chairman Ravi Agrawal also assured that the task of reviewing the Income Tax Act of 1961 will be completed in the given timeframe of six months.   During her Budget speech on July 23, Sitharaman announced a comprehensive review of the Income-tax Act, 1961. “A beginning is being made in the Finance Bill 2024 by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions, and capital gains taxation,” the finance minister had stated in her speech.  

Focus on Improving Taxpayers’ Experience

The finance minister further asked the tax department to make the system more “fair and friendly” to the taxpayers of the country. She emphasised improving the ‘taxpayer experience’ wherein tax notices should be temperate, simple, and easy to understand for the taxpayer.   “Judicious use of power to ensure compliance is important,” Sitharaman underlined, urging the tax officials to use enforcement measures only as a last resort. She highlighted that the notices are not sent to create fear among the taxpayers.   The finance minister further called for the ‘speedy issue’ of refunds and following the due process to encourage voluntary compliance by the taxpayers. Also Read: EPFO To Migrate To New IT System In 3 Months To Address Member Grievances: Check Benefits In his address, CBDT chairman stated that around 72 per cent of the returns have been filed under the new tax regime, highlighting the wider acceptance of the regime. “The first-time filers at 58.57 lakh returns (for AY 2024-25) were a fair indication of widening of the tax base,” he noted.