The new Income Tax Bill is more about consolidation of scattered tax provisions, simplification and elimination of redundant laws than about rate ir structural changes. The Bill, which is likely to be tabled on Thursday, maintains the existing tax rates and leaves capital gains tax rules unchanged.
Contrary to speculations, the old tax regime has not been abolished and will continue to operate alongside the new regime. The new tax regime has been put in chapter XIII of the Bill under the head -- Determination of tax in special cases.
Most of the rate changes announced in the budget have been incorporated in the bill.
The new bill is crisper and shorter with 622 pages as compared to 823 pages earlier. The Income Tax Act, 1961 with 298 sections and 14 schedules has now been recouped into 536 sections over 23 chapters with 16 schedules. The number of proviso and explanations has been substantially reduced and the references to rules and other sections have been curtailed, making the law easier to comprehend.
Under the new proposed law, incomes not forming part of total income have now been moved to schedules to simplify the statute. Deductions from salaries such as standard deduction, gratuity, leave encashment etc, have now been tabulated at one place, instead of being scattered over different sections and rules. All the deductions have been put under chapter VIII from Clause 123 to clause 154.
Various provisions have been summarised in tabular format such as TDS provisions, presumptive taxation rates, assessment time limits etc. The bill has a separate clause (Clause 194) which provides for taxation of earnings from online games, and transfer of virtual digital assets.
It introduces the concept of ‘tax year’ to replace assessment and financial year, thus eliminating the chances of confusion. A tax year would comprise 12 months from April-March of relevant financial year. The language of the law has been simplified. For instance, the term ‘notwithstanding’ has been replaced with ‘irrespective of anything’ at many places.
Giving an example of how the new bill eliminates cross-references, Amit Maheshwari, tax partner, AKM Global, points out that clauses from the other laws such as ‘wealth tax’ has been incorporated clearly in the code as compared to earlier referencing which was making the interpretation complex.
The new Bill has increased the compliance and reporting mechanisms. Clause 509 requires detailed reporting of crypto transactions, clause 510 mandates Annual Information Statements (AIS) for better taxpayer transparency and clause 511 enforces international tax reporting for cross-border transactions.
According to Rajat Mohan, senior partner, AMRG Associates, the bill grants CBDT greater procedural powers to frame schemes and rules, similar to GST. The new proposed law bars civil courts from interfering in tax matters, ensuring direct tax administration authority.
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