The bill proposes to repeal and replace the 60-year old Income-tax Act, (IT, Act), 1961 along with simplification of its language and structure aiming to enhance the ease of doing business.
Need for the Bill
- Numerous Amendments in the existing IT Act, 1961: This has impacted its basic structure.
- Complicated Language: It increases the compliance cost for the taxpayers and impacts efficiency of direct-tax authorities.
Key Highlights of the Bill
- Reduced Volume: The bill removes 283 sections and 24 chapters from the existing 1961 Act.
- Language Simplification: Introduction of 'tax year' instead of the existing terminologies like ‘financial year’ and ‘assessment year’.
- Detailed Framework: Clearly defines taxable income, compliance rules, and restrictions on commercial activities.
- Provision for Virtual Digital Assets: Defines "virtual digital asset" along with clear provisions on their taxation.
- No Change to Tax Slabs: It preserves existing tax slabs and rebate structures, maintaining continuity while improving usability.
- Removal of Redundant Sections: Outdated provisions like the 'fringe benefit tax' are removed to simplify the Act.
- Others: Use of easy to read tables, incorporates taxpayers’ charter outlining responsibilities and rights, provisions for alternate dispute resolutions, etc.