The Finance Ministry is accelerating efforts to review and streamline the Income Tax Act of 1961.
The main aims to simplify the tax system and processes by removing redundant sections, sub-sections, and clauses.
New Act Expected to be announced
A new Income Tax Act i.e., Direct Tax Code is expected to be announced in the February 2025 to replace the existing one and bring about more streamlined and efficient tax system.
Under this new act, special provisions might be introduced for senior citizens, small business and startups to encourage economic growth.
Key Focus
The main focus is to bring more individuals under the tax net by simplifying and making tax filing easier on rationalizing exemptions and deductions.
Sections expected to be abolished
Upto 120 sections and sub-sections of the existing Income Tax Act are expected to be abolished
Structure of the Income Tax Act
The Income Tax Act, was originated in 1922 and took its current form in 1961, currently has 298 sections and 23 chapters.
The revamped Act will be written in clearer language to improve taxpayer services and reduce litigation.
Exploring Global Best Practices
The committee is studying international tax systems to implement a more taxpayer-friendly law, aiming for greater simplicity, improved taxpayer services, tax certainty, and reduced litigation.
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