On October 8, 2024, the Central Board of Direct Taxes (CBDT) announced the formation of an internal committee tasked with reviewing the Income Tax Act, 1961. This initiative is part of the government’s broader efforts to simplify tax regulations and enhance taxpayer compliance. The CBDT has invited public suggestions on various aspects of the Act, aiming to create a more streamlined and user-friendly framework.
The Need for Reform
The Income Tax Act, enacted over six decades ago, has become complex and convoluted, often leading to confusion among taxpayers. In the Union Budget 2024-25, Union Finance Minister Nirmala Sitharaman highlighted the necessity for a comprehensive review of the Act to ensure it is concise, lucid, and easy to understand. The CBDT’s initiative reflects a commitment to modernizing the tax system, making it more accessible to the public.
Key Areas of Focus
The committee is seeking suggestions in four critical areas:
- Simplification of Language
- One of the primary goals is to make the language of the Income Tax Act more straightforward. By eliminating legal jargon and complex terminology, the Act can become more comprehensible for the average taxpayer. This simplification will help individuals and businesses better understand their tax obligations and rights.
- Litigation Reduction
- The existing framework often results in lengthy and costly legal disputes. The committee aims to gather insights on ways to minimize litigation through clearer guidelines and provisions. This reduction in disputes would not only benefit taxpayers but also ease the burden on the judiciary.
- Compliance Reduction
- Compliance with tax regulations can be cumbersome and time-consuming for individuals and businesses alike. The committee seeks to identify redundant processes and requirements that can be streamlined or eliminated altogether. This would enhance the overall efficiency of tax compliance and encourage timely filing.
- Obsolete Provisions
- Over the years, certain provisions of the Income Tax Act have become outdated and irrelevant. The committee is tasked with reviewing these obsolete sections and recommending their removal. This will help ensure that the Act remains relevant to current economic conditions and practices.
Public Participation
To facilitate public input, the CBDT has launched a dedicated webpage on the e-filing portal. Taxpayers can submit their suggestions by entering their mobile numbers and validating their identity via a one-time password (OTP). This step ensures that the feedback process is secure and encourages genuine contributions from the public.
Link for Suggestions
The public can access the feedback form at the following link: CBDT Income Tax Act Review.
The formation of the internal committee by the CBDT signifies a pivotal step towards tax reform in India. By inviting public suggestions, the government is fostering a collaborative approach to policymaking, ensuring that the views of taxpayers are considered in the review process. As the CBDT moves forward with this initiative, it is hoped that the reforms will lead to a more efficient, transparent, and taxpayer-friendly Income Tax Act.
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