Wed Jan 29 21:07:32 UTC 2025: **India Plans Major Income Tax Overhaul for 2025-26 Budget**

NEW DELHI – India’s upcoming 2025-26 Union Budget is poised to significantly simplify the country’s complex tax system, according to a leading industry expert. Koushik Chatterjee, Chairman of the CII National Committee on Taxation and Executive Director & CFO of Tata Steel Limited, advocates for sweeping reforms aimed at easing compliance burdens and expanding the tax base.

Chatterjee, writing in Policy Watch, highlights the government’s commitment to a comprehensive review of the Income Tax Act of 1961, following an announcement by Finance Minister Nirmala Sitharaman. This review, overseen by the Central Board of Direct Taxes (CBDT), will focus on simplifying the Act’s language, reducing litigation, and removing outdated provisions.

Key proposed reforms include:

* **Simplifying the Income Tax Act:** Consolidating explanations, provisos, and circulars to make the Act more user-friendly.
* **Rationalizing TDS Rates:** Reducing the numerous TDS (Tax Deducted at Source) rates and categories to just two or three, minimizing confusion and compliance complexities.
* **Reducing Litigation:** Addressing frequently litigated sections of the Act through amendments and clarifications, potentially adopting a multi-year assessment approach to curb repetitive disputes. Streamlining the appeals process and decoupling Transfer Pricing assessments from other tax assessments.
* **Discontinuing TDS/TCS Certificates:** Eliminating the need for TDS/TCS (Tax Collected at Source) certificates, given the availability of information through Form 26AS/AIS (Annual Information Statement). Exceptions would be made for salary payments, non-resident taxpayers, and cases where PAN is unavailable.
* **Easing Transfer Pricing Compliance for Foreign Companies:** Removing unnecessary compliance requirements for foreign companies exempt from filing income tax returns.
* **Eliminating Redundant Compliance:** Removing obsolete forms and compliance requirements to improve ease of doing business.

These reforms, Chatterjee argues, will boost ease of doing business, broaden the tax base, attract foreign investment, and stimulate economic growth. The proposals are currently under consideration as part of the ongoing Income Tax Act review.

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