Rate changes not a part of the Income-Tax Act review, says govt official

Finance Minister Nirmala Sitharaman announced the review during the Union Budget to review the Income Tax Act, which currently has 298 sections.

The income-tax review committee, tasked with overhauling the country’s decades-old laws, will not suggest changes to tax rates and the focus will remain on simplifying the I-T act to make it more concise and user-friendly, a senior government official has said.

The review committee is aiming to submit all 23 reports on each chapter of the Income Tax Act of 1961 by mid-December, the official said.

“The review committee will not suggest any rate changes. They are reviewing each Act for the purpose of simplifying it, making it concise, user-friendly, and easier to read,” the official told Moneycontrol on condition of anonymity.

The panel’s sub-committees are working overtime to finalise all the reports. So far, eight reports have been submitted to the Central Board of Direct Taxes (CBDT).

The Union Budget, which is normally presented on February 1, is likely to have a simplified IT Act.

“The reports are being submitted and are discussed in parallel by the CBDT. Once the review is complete, the final compilation will be sent to the finance minister,” the official said.

Finance minister Nirmala Sitharaman announced the review of the I-T Act, which has 298 sections, in the budget she presented in July.

The review is not intended to alter the law’s complexity or reduce its intricacies at this stage. Instead, it aims to rephrase convoluted provisions, remove outdated clauses, and eliminate redundancies. “Some provisions have lost their utility, such as deductions that are no longer relevant but remain on the statute. These will be addressed,” the official said.

Committee report

Chaired by chief commissioner of income tax VK Gupta, the committee comprises sub-committees and working groups, each focusing on a specific chapter of the act. These sub-committees are looking into areas such as compliance, exemptions under Section 10 (such as housing rent allowance and leave travel allowance), income derived from trusts (under Sections 11, 12, and 13), penalty provisions, redundancies, and TDS/TCS.

Each sub-committee is led by a principal commissioner of income tax and has over 80 officials.

The committee has also launched an online portal to invite suggestions from the public.

“This is about simplifying the text without altering provisions. We aim to make the law accessible and easier for taxpayers to comprehend,” the official said.