The Minister of State for Finance Pankaj Chaudhary informed Parliament on Monday that the government has undertaken multiple steps to simplify income tax laws, reduce ambiguity and minimise litigation.
Responding to a parliamentary question, the minister said that a comprehensive review of the Income-tax Act, 1961 has been carried out to make provisions clearer, more concise and easier to interpret.
Clearer Language, Retained Legal Consistency
Chaudhary emphasised that while simplifying the law, the government has retained key legal terms already interpreted by courts, ensuring continuity and legal certainty. At the same time, simpler language, structured formulae and tables have been introduced to reduce the scope for multiple interpretations.
He also noted that amendments are made after extensive stakeholder consultations, supported by explanatory memoranda and FAQs. The Central Board of Direct Taxes (CBDT) continues to issue circulars and guidelines to clarify provisions and address taxpayer concerns.
Automated System for Lower or Nil TDS Certificates
A major reform highlighted by the minister is the proposal for a rule-based automated system for issuing certificates for lower or nil Tax Deducted at Source (TDS).
Under amendments proposed in the Finance Bill, 2026, such certificates will be issued electronically, eliminating the need for taxpayers to apply manually to the Assessing Officer. Detailed implementation rules are expected once the bill is enacted.
Trends in Nil Tax Liability Cases
The government also shared data on taxpayers reporting zero gross tax liability, which has seen moderate fluctuations in recent years:
- 1.34 crore (2021-22)
- 1.25 crore (2022-23)
- 1.19 crore (2023-24)
- 1.26 crore (2024-25)
- 1.22 crore (2025-26)
However, the government clarified that no specific data is maintained on ambiguity-related disputes or legal challenges faced by taxpayers since 2020. It added that litigation may also arise from tax evasion or avoidance practices.
Steps to Reduce Tax Disputes
To enhance certainty and reduce disputes, the government has implemented several measures, including:
- Periodic review of tax laws
- Stakeholder consultations
- Explanatory notes and memoranda
- Regular clarifications by tax authorities
These steps are aimed at improving transparency, simplifying compliance and strengthening taxpayer confidence in the system.
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