What is the story about?
The original bill, first introduced in February during the Budget session, was sent immediately for detailed scrutiny to replace the Income Tax Act, 1961. The committee’s suggestions span technical, procedural, and practical changes aimed at simplifying compliance, easing litigation, and enhancing taxpayer relief.
Key Features of the New Draft
- Simplified language and clearer provisions.
- Restructured into 536 sections and 16 schedules for easier reading.
- Replacement of the “Previous Year” and “Assessment Year” system with a single ‘Tax Year’ concept.
- Removal of ambiguous provisions to reduce disputes.
- Greater powers to CBDT to facilitate digital tax administration.
Notable Recommendations Incorporated
- Refund claims allowed even if returns are filed late.
- Section 80M deduction on inter-corporate dividends reintroduced.
- NIL-TDS certificate facility for taxpayers with no tax liability.
- Removal of deemed rent tax on vacant properties.
- 30% standard deduction to apply after municipal taxes in house property income.
- Home-loan interest deduction extended to rented properties.
- Clarified procedural rules for advance rulings, TDS on PF withdrawal, and penal powers.
- MSME definition aligned with the MSME Act.
- Correction of technical and linguistic errors in drafting.
- Commuted pension deduction extended to certain non-employee individuals.
Impact on Taxpayers and Businesses
Experts say the reforms could reduce litigation, simplify compliance, and promote investment by offering greater clarity in tax planning. For individual taxpayers, provisions like late refund claims, relief on vacant property tax, and simplified house property deductions may bring direct financial benefits.The Finance Ministry is expected to provide further details during the bill’s tabling today, indicating which of the committee’s recommendations have been fully adopted.
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