New IT Bill: No Change For Taxpayers, Simplification To Reduce Litigation

The Bill will now be sent to a Joint Parliamentary Committee (JPC). Sitharaman said the committee will examine the new tax proposals, and if necessary, make changes.

“Law should be simple and easy to understand and easy to implement.. The new Bill is not disruptive in any manner, it is more or less a continuation of the same,” Manoj Fadnis, former president of the Institute of Chartered Accountants of India (ICAI) told The Secretariat.

India’s tax structure is considered one of the most complex in the world. In 2017, Deloitte, in a report, ranked India as the 10th most complex country in terms of tax accounting. One of the key reasons for the complexity is the language, filled with obsolete terminology, clauses and structures. Several amendments introduced in the Act over the decades have added to the volume and made it more complex.

Sitharaman said there are "substantial changes" in the Bill compared to the old law. Out of 20,976 online suggestions received, relevant suggestions were examined and incorporated where feasible, an official statement said.

No Change For Taxpayers

The implications for taxpayers will either be nil or minuscule. The content of the new IT Bill remains more or less the same. The purpose of the Bill, which will replace the existing Income-Tax Act, 1961, is to bring in textual and structural simplification for improved clarity and coherence for easier comprehension.

The new Bill also aims to be more digitally compliant, keeping in mind the global best practices. The Minister said that the number of words has come down by half, while sections and chapters have been cut.

One of the key changes proposed in the new Bill is the introduction of the concept of a 'tax year' instead of the 'financial year' (FY) or 'accounting year' (AY).

Key Changes In New Bill

The changes are related to the structure and language of the Bill, which will be more concise, omitting the obsolete provisions.

The number of sections has been reduced from 819 to 536. Similarly, the proposed Bill will have 23 chapters instead of 47 in the existing act with an addition of 39 tables and 40 formulae.

There is no change in the tax slab.  

Sitharaman, who presented the Union Budget two weeks ago, exempted salaried people earning up to Rs 12 lakh a year under the New Tax Regime from paying any income tax. The reduction in tax is expected to boost household consumption, savings and investments, Sitharaman said.

A sagging consumption has become a cause for concern for the government. However, the tax benefit will not be applicable for non-salary incomes such as capital gains.