India's government intends to streamline its income tax reporting procedures, making it easier for taxpayers to comply with the law and reducing disputes that have escalated to more than $120 billion over the last decade.
A proposed overhaul of the Income-tax Act of 1961 is presently being finalized and will likely be released for public input around mid-January, according to sources familiar with the situation, who asked not to be identified because the material is not public. The updated legislation would subsequently be included in the government's budget, which is expected in early February, they said.
The modifications will comprise reducing the language and rationalizing information using formulae and tables, but no changes to tax rates or policies.
For decades, India has tried to update its tax rules in order to decrease the regulatory load on taxpayers and increase compliance. Tax disputes have more than risen to Rs 10.5 trillion ($123 billion) over the past decade, with the fiscal year ending March 2023. Finance Minister Nirmala Sitharaman declared in July that a comprehensive review of tax legislation will be completed within six months to make the regulations more taxpayer-friendly.
According to sources acquainted with the conversations, some of the proposed adjustments are as follows:
Complex income computation frameworks will be replaced with formulas
A single definition of tax year to replace the current practice of assessment year and fiscal year
Tabular representation of identical taxpayers for easy understanding
Reducing the number of supplementary forms taxpayers must submit with their tax returns, and making them available online
