New Income Tax bill - An Act in new avatar

The Government of India is coming up with a new Income Tax Bill that will replace existing Income Tax Act, 1961. The new legislation mainly incorporates tax policy changes, besides being simpler and easier to interpret. The new bill will be introduced in the Parliamnet during the budeget session, after the 2007-08 budget is presented.

The new bill is proposing to do away with many exemptions and deductions, which outlived their utility. The existing Income Tax Act has 700-odd sections and these sections have been reorganised scientifically. Similar provisions have been regrouped to give it a more logical structure.

The re-drafted legislation is expected to reduce ambiguities in the provisions, minimising the scope for different interpretations by the court. Provisos and explanations in the Act are also proposed to be done away with. A proviso normally refers to the exceptions in a particular section in the legislation. In some sense, it curtails the scope of the section. An explanation, on the other hand, clarifies the scope of a particular section in the legislation.

Provisos and explanations are difficult to comprehend for the normal tax payers. An attempt has been made to make the main section clear without the explanations or provisos. Most of the provisions have been made simple and shorter.

We hope, the new Income Tax Act, 2008 may usher in the liberalisation and simplification of our tax structure.