By Nikunj Ohri and Sarita Chaganti Singh
NEW DELHI (Reuters) – India will introduce a new condensed version of its income tax law in the lower house of the Parliament on Thursday, which aims to simplify the six decades old rules that have led to a slew of litigations.
In July 2024, Finance Minister Nirmala Sitharaman announced that the government would simplify its income tax law to make it easy to understand, and aimed to reduce disputes.
Income tax disputes have surged to 13.4 trillion rupees ($154.25 billion) as of March 2024, of which disputes amounting to 3.8 trillion rupees were added in less than two years.
The new income tax bill will drop old and redundant sections of the law to shrink it to 622 pages from over 800 pages, according to the bill reviewed by Reuters.
“By replacing complex provisions with clearer provisions, it aims to reduce legal disputes and encourage voluntary tax compliance,” said Rohinton Sidhwa, a partner at Deloitte India.
The bill includes tax rates in tabulated forms and removes conditions attached to legal clauses, making the law easier to understand. It also drops explanatory footnotes to legal sections and makes clauses self-explanatory.
This isn’t Prime Minister Narendra Modi’s first attempt to overhaul direct tax laws.
His administration had initiated a similar revamp in 2017 and set up a committee of government officials and experts to review it. The government did not accept the panel’s recommendations or make its suggestions public.
(Reporting by Nikunj Ohri and Sarita Chaganti Singh; Editing by Eileen Soreng)
