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Informist, Tuesday, Jul 23, 2024

--BUDGET: Income-tax Act review aims to reduce dispute, litigation 

--Income-tax Act review to be completed in 6 months 

--To merge 2 tax exemption regimes for charities 

--TDS rate on e-commerce to be cut to 0.1% 

--TDS rate on e-commerce operators to 0.1% from 1% 

--To decriminalise delay in payment of TDS by due date 

--To provide standard operating procedures TDS defaults 

--To simplify provisions of tax reassessment 

--To reopen assessment post 3 yrs, upto 5 yrs only for some cases 

NEW DELHI – Finance Minister Nirmala Sitharaman, while detailing the Union Budget for 2024-25 (Apr-Mar) today, announced a comprehensive review of the Income-tax Act, 1961. The review aims at making the Act concise, lucid, and easy to read and understand. 

The Income-tax Act, 1961 is the charging statute of income tax in India. It provides for levy, administration, collection and recovery of income tax.

The review is expected to be completed in six months and may bring down the demands embroiled in litigation. "This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers," Sitharaman said. 

The finance minister also said that a beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS (tax deducted at source) rate structure, provisions for reassessment, and search provisions and capital gains taxation.

Sitharaman also proposed to merge the two tax exemption regimes for charities into one. For simplification of tax deducted at source, the 5% rate on many payments is being merged into the 2% rate, while the 20% tax deducted at source rate on repurchase of units by mutual funds or the Unit Trust of India is proposed to be withdrawn. The Budget also proposed to reduce tax deducted at source rate on e-commerce operators to 0.1% from 1.0%.

The government also plans to have a standard operating procedure for tax deducted at source defaults and simplify the guidelines for such defaults. It also plans to decriminalise delay in payment of tax deducted at source up to the due date of filing a statement for the same.

Sitharaman also proposed a thorough simplification of the process for reassessment of tax cases. An assessment can now be reopened beyond three years from the end of the assessment year only if the escaped income is 5 mln rupees or more, Sitharaman said. The assessment can only be re-opened for a maximum period of five years from the end of the assessment year. "This will reduce tax-uncertainty and disputes," Sitharaman said. 

Even in search cases, the Budget proposed a time limit of six years before the year of search, as against the existing limit of 10 years.  End

Reported by Kabir Sharma

Edited by Tanima Banerjee

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