The reform in the Income Tax Act is part of a broader initiative to ensure a more transparent and taxpayer-friendly system.
In a significant development, Union Finance Minister Nirmala Sitharaman has revealed plans to introduce a new Income Tax Act within the next six months, replacing the existing Income Tax Act of 1961. This new tax code aims to streamline the taxation process and simplify complex tax laws with clearer and more accessible language.
Speaking at the 165th Income Tax Day celebrations, the Finance Minister emphasized that “at least some parts of the new act will be easy to understand.” The reform is part of a broader initiative to ensure a more transparent and taxpayer-friendly system. Sitharaman also urged tax officers to adopt simpler communication methods to reduce fear and anxiety among taxpayers. She highlighted that clarity in tax notices and official correspondence is crucial, advising against the use of technical jargon that can confuse the general public.
Moreover, she emphasized the importance of fair enforcement of tax laws, urging officers to use their powers judiciously. “Disproportionate enforcement actions should be a last resort,” she stated, adding that taxpayers should not face unnecessary harassment.
During the event, CBDT Chairman Ravi Agrawal also reiterated the importance of reforming the current Income Tax Act of 1961. He stressed that the goal is to create a concise, lucid, and easy-to-understand document that reduces litigation and offers greater tax certainty to individuals and businesses alike.
Sitharaman also highlighted the need for a fair and transparent tax refund process, urging for faster resolutions to enhance the taxpayer experience. The focus of these reforms is to promote voluntary tax compliance by fostering a more approachable and “friendly” tax environment rather than one that instils fear.
As the Finance Minister concluded, she reminded tax officers of their responsibility to balance their authority with fairness and integrity. The goal of the new tax code is to create a system that is less daunting and more welcoming to taxpayers, ensuring that compliance becomes easier and less stressful for all.
This upcoming overhaul promises to modernize India’s taxation system while making it more user-friendly, transparent, and efficient for taxpayers across the country.
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