CBDT forms a Committee to examine the Income Tax Act 1961

An internal committee of the Central Board of Direct Taxes (CBDT) has been formed to evaluate the Income Tax Act of 1961. The committee will be led by VK Gupta, the Chief Commissioner of Income Tax.

Union Finance Minister Nirmala Sitharaman announced the formation of this group during her July 2024 Budget speech, stating that the review process will be concluded within six months. The major purpose is to simplify the Act, making it more succinct, clear, and understandable, which is intended to reduce conflicts and litigation while increasing tax certainty for taxpayers.

“The goal is to make the act clear, concise, and easy to read and comprehend. This will reduce conflicts and litigation, giving taxpayers greater tax certainty. It will also bring down the demand that is currently being litigated,” Sitharaman said.

According to officials, the internal committee’s primary goal will be to eliminate outdated terms and implement best worldwide practices to improve compliance.

An official stated that the committee is now assessing the relevance of individual portions and creating a draft for consultation, which would then be open for stakeholder feedback.

In a post-budget discussion, Revenue Secretary Sanjay Malhotra clarified that the study is not designed to develop a new direct tax code, but rather to conduct a thorough examination of the existing law.

According to Malhotra, the tax department’s internal committee would prepare the first draft of the revamped and simplified Income Tax law following the review.