NEW DELHI: The Income Tax Bill, approved by the Cabinet on Friday, will not have any rate surprises. The bill is a major exercise in making the income tax rules simpler and easily comprehensible.
“You can expect simplicity, consistency and direct speech. This law will be written quite differently. What we are saying is that a law which has been amended more than 4,000 times, and has a lot of redundant provisions, can have a simpler rules, which even a salaried taxpayer can read and figure out what are his tax liabilities,” says revenue secretary Tuhin Kanta Pandey in an interaction with TNIE.
He said that worldwide there is a new way of writing laws which is more direct and clearer. Pandey clarified that there are no surprises in terms of tax structure, which he says would not be any different from what the finance minister has already announced.
Finance minister Nirmala Sitharaman has announced major relief to taxpayers in the recent Budget. She has increased the income threshold from Rs 7 lakh to Rs 12 lakh and changed the income tax slabs that will lead to a substantial reduction in tax burden for taxpayers under the new tax regime.
With these changes and the standard deduction of Rs 75,000, an individual under the new tax regime with annual earnings up to Rs 12.75 lakh will not have to pay any taxes.
“There are no other fundamental changes. There will be language change and that will help in reducing litigation. Interpretation creates a lot of litigation. We have made a very sincere effort in a very short time to clean them up (the ambiguities),” he said.
He further said that the bill will go to a parliamentary committee, and feedback would be invited on the same. “These are 1962 laws, which we are changing, so we must put our heads together,” says Pandey.
Sithraman in her 2024 budget speech had announced ‘a comprehensive review of the Income-tax Act, 1961’.
“The purpose is to make the Act concise, lucid, easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers. It will also bring down the demand embroiled in litigation. It is proposed to be completed in six months,” she had said in her budget speech in July 2024.
Meanwhile, speaking on the possible timeline for rollout of the Income Tax Bill, Sitharaman said there are still three critical stages for the bill to pass before it can be rolled out.
“I hope to introduce it in the coming week. After that it will go to a committee, which gives its recommendation. The bill then comes back and the government through the Cabinet takes a call whether these amendments are taken in or more needs to be done. It is only after that the Bill again goes to parliament, which if passed then only the bill can be rolled out,” explained the finance ministry.