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New Income Tax System: A big update has come regarding the tax system. The Finance Ministry is working on the new income tax system. Sources told India Today that the government's aim is to simplify the tax system and process. Under the new system, 125 sections and sub-sections can be abolished.
India Today has learned from sources that the old Income Tax Act will soon be replaced by a new Income Tax Act, the scope of the new Income Tax Act is to simplify it. The Finance Ministry is considering the possibility of announcing it in the upcoming budget in February 2025. The Finance Minister aims to eliminate unnecessary sections and subsections from the Income Tax Act.
At present, the Finance Ministry is busy making amendments in the Income Tax Act, after which the revised 'Income Tax Law' will be presented to the country. If the new system comes into effect, it can be a big change for taxpayers. The Finance Ministry can eliminate unnecessary sections and sub-sections to simplify the tax process.
It is being considered that the tax system should be made as simple as possible. Prime Minister Narendra Modi is emphasizing on bringing more and more people under the tax net and this is the reason why the government has come up with a new tax system.
Feedback sought under the new system
The ministry is reviewing the new tax system and consulting experts. Meanwhile, it has also been learned that there has been a very good response to make the tax filing process easier and simpler. Almost all the responses have requested to make tax filing easier and reduce the compliance burden.
This work will be completed next month
The review and finalisation of the new Income Tax Act will be completed in the coming months. The aim of the reform is to make the tax code more comprehensive, reduce compliance burden and improve clarity for taxpayers. Under this change, new tables will be introduced for expenditure, investments, holdings, assets, liabilities, while a process of investigation for income source may also be introduced.
Income Tax Act 1961 came into effect in 1962
It is worth noting that the Income Tax Act 1961 came into force on 1 April 1962 and is applicable all over India till date. In 2020, the government introduced a new tax system. For the financial year 2023-24 (assessment year 2024-25), 72% of taxpayers filed their returns under this new tax system.
When was Income Tax implemented for the first time in India?
Let us tell you that the income tax system in India was implemented in 1860 by Sir James Wilson, who was the Finance Minister of pre-independence India. This system was implemented to compensate for the financial loss suffered by the government due to the military rebellion of 1857.