Government to Simplify India's Income Tax Act, Seeks Stakeholder Input

New Delhi: As the government plans to review the Income Tax Act, proposed in the Budget 2024-25, the first draft of a new simplified income tax law, will be prepared by an internal committee of the tax department. It will also undertake stakeholder consultation before finalising the legislation, Revenue Secretary Sanjay Malhotra said on Thursday.

This statement came when Malhotra was addressing at an interactive session with leading industry body Ficci. “The exercise is not linked to bringing a new direct taxes code, but a comprehensive review of the income tax law,” he said.

Union finance minister Nirmala Sitharaman in her Budget speech earlier this week announced that a comprehensive review of the Income-tax Act, 1961 will be completed in six months.

“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,” Sitharaman had said.

To a question whether the review would mean that the government would come with a direct tax code, Malhotra said, “It is not a new direct tax code. It is a comprehensive review. We would like to have a collaborative approach,” Malhotra said.