The Income Tax Act, 1961 is still the backbone of tax administration, but the provisions and legal language associated
with it over the years have been considered complex.
In the new draft bill, the government has
(A) Emphasized on making
the language simple and the provisions clear.
(B) The Income Tax Act has been organized in 536 sections and 16
schedules, so that it is easy to read and understand.
(C) An attempt has been made to eliminate the dual system of
“Previous Year” and “Assessment Year” by introducing the concept of “Tax Year”.
(D) Ambiguous or contradictory
provisions have been removed to reduce litigation.
While promoting digital administration, CBDT has been given more power to make rules. several important changes to
provide relief to taxpayers, promote investment and simplify compliance, such as
(A) Relief in tax refund – permission
to claim refund even if the return is filed late.
(B) Dividend deduction – Reintroduction of section 80M deduction on
inter-corporate dividends.
(C) NIL-TDS facility – Taxpayers who do not have tax liability will be able to obtain advance
NIL-TDS certificate.
(D) Tax relief on vacant property – Removal of additional tax burden based on deemed
rent.
(E) Clarity in house property income – 30% standard deduction will be applicable after deducting municipal taxes;
home-loan interest deduction will be available on rented property as well.
(F) Procedural reforms – Advance ruling fees,
TDS on PF withdrawal and clarification on penal powers
(G) Alignment of MSME definition – Define MSME as per MSME
Act.
(H) Correction of linguistic and technical errors – Correction of clause numbering and references.
(I) Clarification
of property classification – Change in terminology ‘occupied’ to avoid confusion between residential and commercial
classification.
(J) Expansion of pension benefits – Extend commuted pension deduction to non-employee individuals as
well.
Major changes in the revised bill
1. Refund claim possible even on late filing of returns.
2. Withdrawal of 80M deduction on inter-corporate dividends.
3. Facility of NIL-TDS certificate.
4. Relief from deemed rent tax on vacant house.
5. Clear definition of 30% deduction on house property.
6. Home-loan interest deduction on rented property.
7. Transparency in procedural rules.
8. Linking the definition of MSME to the MSME Act.
9. Improvements in legal language and drafting.
10. Increasing the scope of commuted pension deduction.
