Finance Minister Nirmala Sitharaman Leads Review of Income Tax Act 1961
On Monday, Finance Minister Nirmala Sitharaman chaired a significant meeting in New Delhi to discuss the comprehensive review of the Income Tax Act 1961. The meeting included key figures such as Revenue Secretary Sanjay Malhotra and CBDT Chairman Ravi Agarwal, along with senior officials from the Central Board of Direct Taxes (CBDT).
This review was announced in the Union Budget 2024-25, presented on July 23. Revenue Secretary Malhotra informed the Finance Minister that 22 specialized sub-committees have been formed to examine various aspects of the Income Tax Act. These committees have been actively engaging with domain experts through numerous meetings, both in person and virtually, to suggest improvements.
Since the portal opened on October 6, the public has submitted 6,500 suggestions, showing active participation in simplifying the Income Tax Act. The aim is to make the Act more concise, clear, and understandable, which will help reduce disputes and litigation, providing greater certainty for taxpayers.
The committee has invited public input in four categories: simplification of language, reduction of litigation, reduction of compliance, and removal of redundant or obsolete provisions. In her Budget speech, Sitharaman emphasized that the review aims to decrease litigation-related demands and proposed that the review be completed within six months.
Doubts Revealed
Finance Minister -: The Finance Minister is a government official in charge of managing a country’s money matters, like taxes and budgets. In India, Nirmala Sitharaman is the current Finance Minister.
Income Tax Act 1961 -: The Income Tax Act 1961 is a law in India that tells people and businesses how much tax they need to pay to the government based on their income.
Revenue Secretary -: The Revenue Secretary is a senior government official who helps manage the country’s income from taxes and other sources. Sanjay Malhotra is the current Revenue Secretary in India.
CBDT -: CBDT stands for the Central Board of Direct Taxes. It is a part of the Indian government that looks after the collection of direct taxes, like income tax.
Union Budget 2024-25 -: The Union Budget is a yearly financial plan presented by the Indian government, showing how it will earn and spend money. The 2024-25 budget refers to the financial year starting in 2024 and ending in 2025.
Sub-committees -: Sub-committees are smaller groups formed within a larger committee to focus on specific tasks or issues. In this case, 22 sub-committees are working to improve the Income Tax Act.
Tax certainty -: Tax certainty means making sure that people and businesses know exactly how much tax they need to pay, without any confusion or unexpected changes.
Litigation -: Litigation refers to the process of taking legal action or resolving disputes in court. In the context of taxes, it means dealing with disagreements about tax payments.
Compliance -: Compliance means following the rules and laws set by the government. In terms of taxes, it means paying taxes correctly and on time.
Obsolete provisions -: Obsolete provisions are parts of a law that are outdated or no longer useful. The review aims to remove or update these parts in the Income Tax Act.