The Central Board of Direct Taxes (CBDT) is working on an easier version of the income tax laws, as the government prepares to show the Union Budget for 2025 on February 1.
The current comprehensive review of the direct tax laws has the motive to facilitate the statutory issues and lessen the litigation load for both the government along the industry.
As per the sources, under review, the revenue department is concentrating merely on streamlining the language and does not wish to amend any tax rates.
The sources establish that the review of the current Income Tax Act, 1961, is indeed preceding to facilitate the specific penal provisions, which shall diminish the litigation including the rectification of the whole litigation management as an intent of the same practice.
The CBDT is obligated to do the review towards the formation and implementation of the income tax laws in the country which functions under the aegis of the revenue department of the finance ministry-made an internal panel existingly performing a holistic review of the Income Tax Act 1961.
Through the easier interpretations, the panel is regarding to furnish the clarity in the provisions. It is in favour of adding the FAQs for transparency in evaluating the provision’s objective for both the taxpayers and officers.
Whether the review will be mentioned in the form of a new act or introduced via amendments is that the government has not decided till now.
As per the sources, the review may facilitate the provisions of TDS, TCS, capital gain, and clarifications on the problems such as the categorization of the taxpayer and the income sources.
The objective of the government in the forthcoming budget 2025 in February is to show the findings and proposals from the direct tax laws review.
Tax experts cited that the upcoming budget in India is expected to reveal the new Direct Tax Code 2025, a development that has created interest and discussion.
Certain amendments seem to be introduced in the direct tax code that comprise facilitating the tax filing by lessening the number of sections and incorporating more schedules which eases the assessee clarification to residents and non-residents, removing the classifications like ROR and RNOR., removing the deductions and exemptions to close the loopholes and assure a more impartial tax system, expanding the scope of Tax Deducted and Collected at Source (TDS/TCS)
To include all income types, promoting regular tax payments and reducing evasion, taxing capital gains as regular income, which results in higher taxes for certain though ensures the equal treatment of all the income types, eliminating the concepts of “Assessment Year” and “Previous Year”, via “Financial Year” for tax filing, renaming income categories for clarity, with “Income from Salary” becoming “Employment Income” and “Income from Other Sources” becoming “Income from Residuary Sources.
Increasing the capital gains tax in the name of simplification of tax laws are not acceptable and will be certainly counter productive for the Government.