The Income Tax department on Monday announced the formation of an internal committee to review the Income-tax Act and invited public inputs and suggestions on four key areas — simplification of language, litigation reduction, compliance reduction, and obsolete provisions. The Central Board of Direct Taxes (CBDT), the body overseeing the Income Tax Department, in a statement said the public can send their suggestions on the website by entering their mobile number and validating it via one-time password (OTP). “The committee invites public inputs and suggestions in four categories: simplification of language, litigation reduction, compliance reduction, and redundant/obsolete provisions. To facilitate this, a webpage has been launched on the e-filing portal with the following link: The public can access the page by entering their mobile number and validating it via OTP,” the CBDT said. The suggestions should specify the relevant provision of the Income-tax Act, 1961 or Income-tax Rules, 1962 (mentioning the specific section, sub-section, clause, rule, sub-rule, or form number), as the case may be, to which the suggestion relates under the four categories, it said. The Income-tax Act has 298 sections, 14 schedules, 23 chapters and several rules detailing the direct tax provisions. In the Union Budget 2024-25, Union Finance Minister Nirmala Sitharaman had announced a review of the Income Tax Act, 1961, stating that 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,” Sitharaman had said. Going by the Budget announcement’s date, the six-month timeline ends in January 2025. This has raised expectations that the amended I-T Act could be brought in the Budget session of Parliament, which is likely to begin January-end next year. Before this, the government has attempted to simplify the Income-tax Act several times. In 2018, a task force was formed to draft a new direct tax law that submitted its report in 2019. Direct Taxes Code (DTC) was earlier proposed by the UPA I government, a draft Bill was put up in August 2009 and it was tabled in Parliament in 2010. The Bill, after review by the Standing Committee, was then revised twice, in 2012 and 2014, but lapsed with the dissolution of the 15th Lok Sabha. In her Budget 2024-25 speech in July this year, Sitharaman said that a beginning was being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions and capital gains taxation. The Budget brought in changes for capital gains tax framework considering the differences in both the tax rates as well as the holding periods for determination of long-term gains across asset classes such as equities, debt, real estate etc. It proposed levying a tax of 12.5 per cent on long-term capital gains on all financial and non-financial assets along with eliminating the benefit of indexation. The proposal was then changed by the government giving taxpayers the option to pay long-term capital gains tax of 20 per cent with indexation benefits on the sale of a property that has been acquired before July 23, 2024. Investors can also choose the option of paying a lower tax rate of 12.5 per cent, but, without availing the indexation benefit. Indexation refers to the adjustment of the purchase price of an asset based on the rate of inflation over the period that it has been held by the investor.
