India will present a new, condensed version of its income tax law in the lower house of Parliament on Thursday, aiming to simplify the six-decade-old regulations that have contributed to widespread legal disputes.
Finance Minister Nirmala Sitharaman first announced plans for tax law simplification in July 2024, emphasizing the need for clarity and reduced litigation. As of March 2024, income tax disputes had surged to ₹13.4 trillion ($154.25 billion), with ₹3.8 trillion added in less than two years.
Key Features of the New Tax Bill
The revised bill eliminates outdated sections, reducing the law’s length from over 800 pages to 622 pages. Key changes include:
- Clearer Provisions: Replacing complex legal jargon with straightforward language.
- Simplified Tax Rates: Presented in easy-to-read tabulated formats.
- Self-Explanatory Clauses: Removing attached conditions and explanatory footnotes.
“This move will reduce legal disputes and encourage voluntary tax compliance,” said Rohinton Sidhwa, a partner at Deloitte India.
Modi’s Second Attempt at Direct Tax Reforms
This isn’t Prime Minister Narendra Modi’s first effort to revamp India’s direct tax system. In 2017, his government formed a panel of officials and experts to review tax laws, but their recommendations were never implemented.
With this latest reform, the government hopes to streamline taxation, reduce legal challenges, and create a more taxpayer-friendly system.
