Income Tax Review Committee Aims to Simplify IT Act Without Changing Tax Rates

The Income-Tax Review Committee, tasked with overhauling India’s Income Tax Act of 1961, is focusing solely on simplifying the law to make it more concise and user-friendly. A senior government official confirmed that the committee will not propose any changes to tax rates.

Streamlining the Income Tax Act

The review committee plans to submit all 23 reports, each addressing a chapter of the Income Tax Act, by mid-December 2024. According to the official, the objective is to simplify convoluted provisions, remove outdated clauses and eliminate redundancies:

• Outdated deductions: The review will address provisions that have lost relevance.
• Simplified language: The committee aims to rephrase complex sections to make the Act more accessible.
• Redundancy elimination: Clauses no longer in use will be removed.

"The purpose is to simplify, not alter, the essence of the law or its intricacies," the official said.

Progress of the Review

The review committee has submitted eight reports so far to the Central Board of Direct Taxes (CBDT). Discussions are being held in parallel as the committee works to finalize all reports before submitting the compilation to Finance Minister Nirmala Sitharaman.

Chaired by Chief Commissioner of Income Tax VK Gupta, the committee comprises sub-committees led by principal commissioners of income tax, with over 80 officials working collaboratively.

Public Participation Encouraged

An online portal has been launched to gather suggestions from the public, ensuring that stakeholders have a voice in the reform process.

A Simplified Act in the Upcoming Budget

The simplified Income Tax Act is expected to feature in the Union Budget 2025, typically presented on February 1. Announced by Finance Minister Nirmala Sitharaman in the July budget, this initiative aims to modernize a law with 298 sections.

By rephrasing complex provisions and removing redundancies, the committee’s efforts promise to make the tax law more accessible, particularly for individual taxpayers and small businesses navigating compliance.