New Income Tax Bill to replace 1961 Act: What's changing
What's the story
The Union Cabinet, led by Prime Minister Narendra Modi, has approved a new Income Tax Bill. It will be introduced in the Lok Sabha in the coming days by Finance Minister Nirmala Sitharaman. It seeks to replace the current Income Tax Act of 1961, marking a major overhaul in India's taxation system. After the bill's introduction, a parliamentary standing committee will review it and send it back to the Cabinet for final approval.
Simplification
New bill to simplify tax compliance
The new Income Tax Bill is likely to simplify compliance and reduce disputes, as per experts. Shefali Mundra, a tax expert at ClearTax, listed a few key features of the upcoming legislation. These include a simplified residence rule for determining residential status, lesser provisions than the current law, and an enhanced ease of compliance aimed at simplifying tax filing for both taxpayers and authorities.
Streamlining
Streamlining tax system and aligning rates
The new bill aims to simplify the tax system by cutting down on deductions and exemptions. It could also bring India's tax rates on par with the rest of the world, making it easier to attract foreign and domestic investments. It will also increase India's tax-to-GDP ratio and support economic growth. Mundra further added that clearer tax laws would reduce legal disputes, which would be a major improvement in the country's taxation landscape.