Public Consultation on Comprehensive Review of the Income-tax Act: Government Seeks Stakeholder Input for Simplification and Modernization

The Central Board of Direct Taxes (CBDT) has initiated a significant move toward modernizing and simplifying the Income-tax Act of 1961, as announced in the Union Budget for 2024-25 by Finance Minister Nirmala Sitharaman. In line with the government’s ongoing efforts to improve tax administration and make the tax laws more transparent and efficient, the CBDT has formed a specialized internal committee to conduct a comprehensive review of the existing Income-tax Act. This review aims to make the Act more concise, user-friendly, and easier to navigate for all taxpayers.

To encourage broad-based participation in this reform initiative, the CBDT has opened the doors for public involvement by inviting suggestions and inputs from stakeholders, tax professionals, legal experts, and the general public. People can submit their recommendations through the Income Tax e-filing portal, which now hosts a dedicated section for these suggestions. This step is seen as an important move toward making tax laws less complicated and reducing the burden on taxpayers, while also addressing outdated provisions that no longer serve the current tax framework.

The objective of this initiative is not just to simplify the language of the law but to also tackle long-standing issues such as litigation and compliance burdens. By making tax laws clearer and more straightforward, the government hopes to reduce disputes and foster greater tax certainty among taxpayers. Additionally, the review will also address redundant or obsolete provisions in the law that have either become outdated or are no longer relevant due to changing economic and business conditions.

In particular, the CBDT has identified four key categories under which it seeks public input:

1. Simplification of Language: Many tax laws are considered overly complex due to the technical jargon and intricate language. The committee aims to simplify the text, making it more accessible to all taxpayers.

2. Litigation Reduction: Frequent legal disputes and litigation over tax provisions add to the burden on both taxpayers and the judicial system. The goal is to minimize areas of ambiguity that lead to disagreements.

3. Compliance Reduction: Simplifying the compliance process for taxpayers is another critical focus, ensuring that meeting tax obligations is less time-consuming and cumbersome.

4. Review of Redundant or Obsolete Provisions: As the economic landscape evolves, certain sections of the law may become outdated. The committee seeks to identify and remove such provisions to streamline the tax code.

To make a suggestion, interested parties can log into the e-filing portal from October 6, 2024. After entering their name and mobile number, users will receive a One-Time Password (OTP) to validate their identity, after which they can access the submission page.

When submitting suggestions, individuals are required to clearly mention the specific section, sub-section, clause, rule, sub-rule, or form number of the Income-tax Act, 1961 or the Income-tax Rules, 1962 to which their feedback relates. This structured approach will help the committee in evaluating the suggestions more efficiently.

This is a golden opportunity for taxpayers, professionals, and legal experts to participate in shaping the future of tax policy in India. By engaging with the process, stakeholders can help create a tax system that is fair, clear, and in tune with modern economic realities.