SBI Research Calls for Quick Review of Income Tax Act in Budget 2024-25
In a recent report, SBI Research has emphasized the need for a swift review of the Income Tax Act as announced in the Budget 2024-25. The report suggests introducing the revised Act as a money bill to ensure its passage within 75 days, aiming to simplify the taxation process and align it with economic growth and inclusivity.
Key Recommendations
The report proposes raising the TDS threshold on bank interest payments from Rs 10,000 to at least Rs 100,000 and suggests issuing TDS certificates annually instead of quarterly. It also recommends a flat tax rate for individuals earning over Rs 8 lakhs, particularly for those aged 60 to 80, with additional provisions for those aged 80 and above.
Government’s Initiative
Earlier this month, the Central Board of Direct Taxes (CBDT) formed an internal committee to review the Income-tax Act, 1961, as announced by Finance Minister Nirmala Sitharaman. The aim is to make the Act concise and clear, reducing disputes and providing greater tax certainty. The committee is seeking public input on simplifying the Act, reducing litigation, streamlining compliance, and removing obsolete provisions.
Stakeholder Participation
SBI Research, led by Group Chief Economic Adviser Soumya Kanti Ghosh, urges all stakeholders to participate in shaping future tax legislation. The report highlights the increasing contribution of direct taxes to total tax revenue, which reached 56.7% in the assessment year 2024, the highest in 14 years.
Income Tax Filing Trends
The growth rate of Personal Income Tax collections has outpaced Corporate Tax collections since 2020-21. The number of Income Tax Returns filed in 2024 saw a significant increase, with 8.6 crore returns filed, 79% of which were submitted on time. SBI Research anticipates that the total number of filings could exceed 9 crore by March 2025, with states like UP, Bihar, AP, Punjab, and Rajasthan showing growth in filers.
Doubts Revealed
SBI Research -: SBI Research is a part of the State Bank of India, which is one of the largest banks in India. They study and analyze economic and financial data to provide insights and recommendations.
Income Tax Act -: The Income Tax Act is a law in India that tells people and businesses how much tax they need to pay to the government based on their income.
Budget 2024-25 -: The Budget 2024-25 refers to the financial plan that the Indian government will present for the year 2024-2025. It includes details on how the government plans to earn and spend money.
Money bill -: A money bill is a special type of bill in India that deals only with taxes and government spending. It can be passed more quickly than other types of bills.
TDS threshold -: TDS stands for Tax Deducted at Source. The TDS threshold is the minimum amount of money you can earn before tax is automatically taken out by the bank or employer.
TDS certificates -: TDS certificates are documents that show how much tax has been deducted from your income. They are usually given by the bank or employer.
Central Board of Direct Taxes -: The Central Board of Direct Taxes (CBDT) is a part of the Indian government that looks after the rules and collection of direct taxes like income tax.
Direct taxes -: Direct taxes are taxes that people and businesses pay directly to the government, like income tax. They are based on how much money you earn.
Income Tax Return filings -: Income Tax Return filings are forms that people and businesses fill out to tell the government how much money they earned and how much tax they need to pay.