The Indian government is gearing up to make massive changes to its income tax filing process seeking to demystify the process and help taxpayers as well as de-clog the growing tax litigations, which currently exceed $120 billion for the past decade. The Income Tax Act of 1961 may be revised soon as the government considers a new proposal that will be released for public debate in mid-January. The changes will be alongside the budget, which is expected to be implemented in early February.
The main modifications drawn up largely concern the rationalization of the language and layout of the provisions of the tax code. The idea is to make it easier for taxpayers by eliminating the flowy descriptions and instead using boxes and formulas to provide information in a useful format. This will be done without changing the rate of tax or any other large policy change of taxation.
To date, the Ministry of Finance has not provided any reply to such questions related to the above-mentioned updates; however, insiders in this regard argue that such changes aim to assist the taxpayers in observing the law more effectively and with fewer complaints about complexities of the legal procedures that cause unnecessary arguments. To simplify and increase the overall level of compliance with taxes, the government has been increasing the process of modernizing Indian tax laws for the past several years.
Disputes over taxes have shot up over the last decade in India, and by March end of 2023, there were more than 10.5 trillion rupees ($123 billion) of continued disputed tax cases. Finance Minister Nirmala Sitharaman stated in July that tax rules would be modernised to ensure that the law becomes more friendly to taxpayers in India. These planned reforms are a notable advance in a continuing government process to enhance the tax structure in India.
Join our whatsapp group for Latest updates