No more complexity! Government unveils simplified tax law

Revamping India’s Tax System: The New Income Tax Bill to Replace the 1961 Act

In a major move to simplify India’s taxation framework, the government is set to introduce a new Income Tax Bill that will replace the archaic 1961 Act.

A Modernized Approach to Taxation

The new Income Tax Bill aims to overhaul the Income Tax Act of 1961, which has become outdated due to technological advances and evolving socio-economic conditions. The current law has grown cumbersome with hundreds of amendments, making it challenging for the average taxpayer to comprehend.

A Simplified, Leaner Law
The government’s goal is to create a tax law that is concise and easy to understand, with simpler language and fewer sections. The Bill is designed to reduce the burden of complex legalese and make the tax filing process more transparent for citizens.

Eliminating Obsolete Provisions

With the abolition of several taxes like wealth and gift tax over time, many sections of the 1961 Act have become redundant. The new Bill will remove these obsolete sections and offer a more relevant, streamlined framework for tax compliance.

Tax Neutral: No Extra Burden on Taxpayers

The government has assured that the new tax law will be revenue-neutral, meaning it won’t impose a higher tax burden on the common man. Changes to tax rates will likely be dealt with separately through the Finance Act.

Past Attempts at Reform

The government's attempt to overhaul the Income Tax Act isn’t new. In 2010, the Direct Taxes Code Bill was introduced but lapsed after the change in government. In 2017, a six-member committee was tasked with redrafting the law, and it presented its report in 2019.