The government is working to make Income Tax Return (ITR) filing easier and more convenient for taxpayers.
Its goal is to simplify the rules, reduce tax disputes, and increase transparency in the tax process.
To achieve this, a committee from the Central Board of Direct Taxes (CBDT) has been formed to review the Income Tax Act of 1961.
Draft Report Expected by January 2025
The committee formed by the CBDT is reviewing the Income Tax Act, and it is expected that a draft report will be available for public consultation by mid-January 2025.
This report could play a significant role in simplifying and clarifying tax laws. The government may present it in the budget on February 1, 2025.
Simplified Language for Tax Laws
The report states that the language of the Income Tax Act will be simplified, making it easier for everyone to understand without needing expert help.
Currently, there are no plans to change tax rates or policies. Additionally, tax formulas and tables will be streamlined.
Introduction of “Tax Year” Concept
The plan is to replace the current concepts of financial year and assessment year with a new term called “tax year.”
Tax calculations will also be simplified and shown in tables to make it easier for taxpayers to understand.
Fewer Forms for Tax Filing
The government is thinking about reducing the number of additional forms, which will make filing tax returns easier.
The Finance Ministry has promised to lessen the bureaucratic burden on taxpayers and improve compliance.
No Need for a Chartered Accountant (CA)
On Income Tax Day, Finance Minister Nirmala Sitharaman advised officials to be faceless, fair, and taxpayer-friendly.
She emphasized that the language of notices should be simple and non-technical, allowing taxpayers to respond without needing a lawyer or CA.
Addressing Tax Disputes
Tax disputes totaling $123 billion (around Rs 10.5 lakh crore) are pending in India. The government aims to reduce these disputes by updating tax laws.
The Finance Minister has stated that a thorough review will be completed within six months to address this.
It is important to note that with simpler, taxpayer-friendly rules, this change will help improve tax compliance and reduce disputes.
