Latest news with #IncomeTaxActof1961
Business Standard
11 hours ago
- Business
- Business Standard
No change in LTCG tax rates under Income Tax Bill 2025, clarifies IT dept
The Income Tax Department has clarified that the proposed Income Tax Bill 2025 does not seek to change any tax rates, including those on Long Term Capital Gains (LTCG), amid reports suggesting otherwise. The clarification was issued through an official statement on social media, responding to speculation in several media outlets regarding potential changes to the taxation structure. According to the department, the new bill is focused solely on simplifying legal language and removing redundant or obsolete provisions from the current law. It emphasised that the draft legislation does not contain any proposals for altering tax rates applicable to any category of taxpayers. "Any ambiguity in this respect shall be duly addressed during the passing of the Bill," the department said in its statement on X. The Income Tax Bill 2025 is expected to replace the existing Income Tax Act of 1961 and has been designed to modernise the tax code, making it more streamlined and easier to navigate, particularly in the context of increasing digital integration and compliance automation.
Mint
2 days ago
- Business
- Mint
India's Income Tax law revision: Why well begun is still only half done
Ketan Dalal The draft of India's 2025 Income Tax Bill simplifies the language of the complex 1961 Act. This is welcome. But the effort must not end there. We also need changes that go beyond form to address key aspects of substance. Given the Simplification Committee's mandate, it has done well to simplify the law's language, but at least some structural changes are needed. Gift this article There has been significant press coverage of India's Income Tax Bill, 2025, which was introduced in Parliament on 21 July. As readers would recall, a committee was set up in October 2024 for the simplification of the Income Tax Act; the panel's mandate was ring-fenced to simplification of language, reduction of litigation and the compliance burden, and the removal of redundant or obsolete provisions. In that sense, the committee was restrained by its limited mandate. There has been significant press coverage of India's Income Tax Bill, 2025, which was introduced in Parliament on 21 July. As readers would recall, a committee was set up in October 2024 for the simplification of the Income Tax Act; the panel's mandate was ring-fenced to simplification of language, reduction of litigation and the compliance burden, and the removal of redundant or obsolete provisions. In that sense, the committee was restrained by its limited mandate. A Lok Sabha Select Committee was set up to look at the draft Income Tax Bill framed by the Simplification Committee, which has submitted its report with 285 recommendations, a majority of which seem to find favour with the government; the net result is that the bill framed by the simplification panel will likely be passed into law with some changes. However, there are some key aspects that need to be discussed. The Income Tax Act of 1961 has been amended dozens of times, and with some 4,000 amendments, its language had turned complex; in this context, the simplification panel has made a good attempt to offer clarity. For example, several tables and explanations have been added and the number of sections has been brought down from 819 to 516. However, there are concerns over several aspects; for example, there has been a tendency to delegate rule-making to the Central Board of Direct Taxes (CBDT)—like in the case of faceless assessments—whereby, compared to existing provisions, the CBDT would gain greater scope to make legislative -type changes without parliamentary oversight. This is worrisome. There are apparent errors and omissions in the existing law that should have been corrected. For example, in the context of the 'deemed gift' provision u/s 56(2)(x), the definition of 'relative' for tax exemption does not expressly include reciprocity, or whether the relationship is mutually applicable for gifting; this aspect should have been explicitly clarified (even under the existing law, the CDBT should have issued such a circular). It impacts gifting between taxpayers and nephews, for example, if the tax exemption for relatives applies only one-way. Also, the tax neutrality provision for a 'demerger' does not include 'fast track demerger,' because that concept came later. Representations were received by the Select Committee and both these aspects were pointed out to the ministry, but were apparently brushed aside; surprisingly, the common-sense point that relationships should be reciprocal (or two-way) was met with a response from the ministry that this is 'in the nature of a major policy change"! Although the Committee's mandate was limited, the larger concern is that once the bill is enacted, the government would be reluctant to make substantive changes. Here are some we badly need. Individual taxation: The limit of annual income beyond which the maximum tax rate kicks in is only ₹ 15 lakh, which seems too low and needs to be addressed. Also, medical expenses have gone through the roof in the last few years, as have education costs; both these are critical, and even relatively well-off Indians are struggling to meet these costs. The bill should allow a higher deduction for mediclaim and medical expenses and provide for a meaningful deduction for education (the latter could help address the skill gaps we face). Real estate costs have also shot up, while the deduction of interest on housing loans is too low at ₹ 2 lakh per year. This badly needs an upward revision. Corporate taxation: India's corporate tax rate is very reasonable at 25%; however, some aspects that need to be addressed relate to mergers and acquisitions (M&As), including group restructuring. Some specific aspects that could be looked at even at this stage have been long-standing demands. The definition of a 'demerger' for tax neutrality is highly restrictive and needs rationalization. The commercial reality of M&A transactions involves earn-outs and deferred amounts, and the Act does not have contemporary provisions on the year of taxability, which causes uncertainty and litigation. Losses of merging companies are allowed to be carried forward only in restricted circumstances, primarily if the merging company is in manufacturing; this is a relic from a bygone era, since several service companies also have losses and the mergers of such companies could save them from extinction and prevent job losses. India's problem of non-performing assets has reduced but is still substantial. In the context of takeovers that emerge from the official bankruptcy process, the provision in Section 28 that makes write-backs of haircuts taken by lenders taxable is a major dampener from the perspective of an acquirer that seeks to reduce its risk of acquiring an insolvent company to resurrect. The last two aspects have again been pointed out to the ministry, which appears not to see merit in these changes. Also Read: India's Income Tax Bill sets the stage for significant reforms Administrative dimensions: There have been simplifications in Tax Collected at Source (TCS) and Tax Deducted at Source (TDS), but the larger issue is that the deductor of tax is doing the government's job; from an Ease of Doing Business perspective, TDS provisions need to be shrunk, as opposed to language being simplified. Also, given the need to reduce tax litigation, a robust advance ruling mechanism needs to be put in place, so that tax disputes can be addressed upfront; all advance ruling mechanisms till now have failed, either because of faulty architecture or elongated time frames (or both), making the term 'advance' seem meaningless. Given the Simplification Committee's mandate, it has done well to simplify the law's language, but unfortunately, that's about form rather than substance; the issues outlined above still need to be addressed in the context of India's avowed intent to ease business. At least some structural changes are needed. A redraft of our tax law is useful and attractive, no doubt, but would be disappointing if it falls short of dealing with fundamental issues. The author is managing director, Katalyst Advisors Pvt Ltd. Topics You May Be Interested In
Hans India
22-07-2025
- Business
- Hans India
New income tax bill to simplify tax filing for commoners, small businesses: Jay Panda
New Delhi: The new income tax bill will make filing taxes easier for common citizens and small businesses, said BJP MP Baijayant Jay Panda, who chaired the Parliamentary Select Committee responsible for reviewing the legislation. Speaking to IANS, he emphasised that the new law, once passed, will simplify India's decades-old tax structure, cut down legal confusion, and help individual taxpayers and MSMEs avoid unnecessary litigation. "The current Income Tax Act of 1961 has undergone more than 4,000 amendments and contains over 5 lakh words. It has become too complex. The new bill simplifies that by nearly 50 per cent -- making it far easier for ordinary taxpayers to read and understand," Panda told IANS. He highlighted that the greatest beneficiaries of this simplification would be small business owners and MSMEs who often lack the legal and financial expertise to navigate complicated tax structures. 'Unlike large corporations that have access to tax consultants and legal advisors, MSMEs and common taxpayers struggle. A simpler law means fewer disputes and easier compliance,' he said. The Select Committee, under Panda's leadership, held 36 uninterrupted meetings over several months. It consulted more than a hundred stakeholders, including industry bodies and individual experts. Panda noted with pride that not a single meeting was postponed and no extension was sought, making this committee a rare example of efficient parliamentary functioning. The report, which includes over 300 recommendations, has been submitted well within schedule and is expected to be tabled during the current Monsoon Session. 'If passed, the new law could take effect from April 1 next year,' he added. Panda credited this success to bipartisan cooperation. "There was no political point-scoring. Every member focused on simplifying the tax law for the benefit of taxpayers. It was truly a team effort in the national interest," he told IANS. 'While the bill itself does not change tax policies -- which remain the domain of the Finance Bill and the Union Budget -- it lays a modern, simplified foundation that allows existing and future tax policies to be implemented more clearly and effectively,' he added. Panda also clarified that the committee did not propose any policy changes but ensured the legal structure accommodates all recent reforms and is accessible to every citizen. "Simplifying the law itself helps policy implementation and reduces confusion for both taxpayers and tax administrators," he said.
Mint
21-07-2025
- Business
- Mint
Lok Sabha panel flags fixes in draft Income Tax Bill, backs simplification agenda
New Delhi: India's most significant direct tax reform in over six decades moved a step closer to becoming law on Monday, as the Select Committee of the Lok Sabha submitted its report on the draft Income Tax Bill, 2025. The panel broadly endorsed the government's goal of simplifying the tax code, but recommended a series of changes to address potential ambiguities, safeguard taxpayer rights, and ensure regulatory continuity. The report, tabled by committee chairperson Baijayant Panda, a member of parliament from the Bharatiya Janata Party (BJP), comes a few months after the bill was introduced in Parliament in February by finance minister Nirmala Sitharaman. The proposed law is intended to replace the Income Tax Act of 1961, which has served as the cornerstone of India's direct tax regime for more than six decades. While expressing support for the bill's intent to streamline tax administration, the 32-member panel flagged multiple concerns and technical inconsistencies that it said could dilute protections or increase the compliance burden if left unaddressed. Among its core recommendations, the Committee called for clarifying several key definitions—such as those of capital asset, infrastructure capital company, and parent company—to align them with current laws and remove outdated references. It urged harmonization of the definitions for micro and small enterprises with the MSMED Act, and pressed for more precise rules on various deductions, including those related to house property income, scientific research, and pension contributions. The panel identified a drafting anomaly in the rebate clause applicable to individuals earning above ₹ 12 lakh and recommended corrective language to avoid misinterpretation. To protect taxpayer rights and preserve discretion under the anti-avoidance regime, the Committee proposed reinstating the phrase 'in the circumstances of the case' under the General Anti-Avoidance Rules (GAAR). It noted that the phrase had served as an important safeguard to ensure that tax enforcement under GAAR was context-sensitive and not excessive. The report also opposed the blanket disallowance of deductions for late filers and supported retaining flexibilities like 'deemed application' for non-profits. It urged clearer rules for taxing religious and charitable trusts and anonymous donations to reduce ambiguity. In addition, the panel recommended that valid circulars, approvals, and exemptions under the existing Income Tax Act, 1961 be explicitly carried forward into the new regime. It also called for easing compliance requirements for non-residents and codifying standards related to valuer qualifications and jurisdictional limits. The Committee flagged the risk of prosecution in cases where small taxpayers fall below the taxable threshold but are still required to file returns to claim refunds. 'The Committee observed that the current mandatory requirement to file a return solely for the purpose of claiming a refund could inadvertently lead to prosecution, particularly for small taxpayers whose income falls below the taxable threshold but from whom tax has been deducted at source,' the report said. 'The Committee, therefore, recommended…to provide flexibility for allowing refund claims in cases where the return is not filed in due time,' it added. For non-resident liaison offices, the Committee proposed extending the timeline for filing compliance statements from 60 days to eight months, citing the practical challenges faced by overseas entities in adhering to tight deadlines. The Committee emphasized the need for a clean but careful transition from the old law to the new regime. It recommended revising Clause 536—which repeals the Income Tax Act, 1961—to explicitly carry forward all valid rules, circulars, and approvals to prevent operational disruption. Other technical suggestions included reinstating the term 'Nil' in clauses related to lower tax deduction certificates, prescribing clear qualifications for registered valuers, and correcting ambiguous language around deductions and refund eligibility. With the submission of the Select Committee's report, the finance ministry will now examine the recommendations before finalizing the legislation for passage. Given the breadth of changes suggested, some revisions are expected before the bill becomes law. "The statement of objects and reasons of the Bill clearly states that as a result of amendments, the basic structure of the Income-tax Act, 1961 has been overburdened and language has become complex, increasing the cost of compliance for taxpayers and hampering the efficiency of direct-tax administration," Panda, the chairperson of the committee said in the report. Panda said the Income-Tax Bill, 2025, has been prepared to make the law concise, lucid and easy to read and understand. "The mandated function of a Select Committee on a Bill is to go through the text of the Bill, clause-by-clause, in order to see that the provisions of the Bill bring out clearly the intention behind the measure, that there will be no procedural defect in its working, that the Bill does not offend provisions of the existing law and that the object proposed to be achieved is adequately brought out," Panda added.
Mint
18-07-2025
- Business
- Mint
Oil stock Chennai Petroleum declares ₹5 per share final dividend for FY25. Record date, other details
Chennai Petroleum Corporation on Friday, July 18, announced the record date for the final dividend announced by the company for FY25 in April this year. The oil company has set Friday, August 1, 2025, as the record date to ascertain eligibility for the final equity dividend of ₹ 5 per share for the fiscal year 2024-25. This dividend, proposed by the Board of Directors on April 25, 2025, awaits approval from the members at the forthcoming Annual General Meeting (AGM). The proposed final dividend of ₹ 5 per equity share, representing 50% of the paid-up equity share capital, requires approval from shareholders at the upcoming AGM. If it receives approval, the dividend will be distributed to eligible members within 30 days following the AGM. As stated in the exchange filing, under the Income Tax Act of 1961, dividends received by shareholders are subject to taxation. CPCL must withhold tax at the source (TDS) when distributing dividends. Shareholders are urged to submit the necessary documents by Wednesday, August 13, 2025, so that the company can establish the correct TDS rate. Comprehensive details regarding TDS on dividends can be found on the company's website. Chennai Petroleum Corporation Limited is an enterprise owned by the Government of India and is a subsidiary of Indian Oil Corporation Ltd (IOCL). Chennai Petroleum share price today opened at ₹ 751.40 apiece; the stock touched an intraday high of ₹ 768.15 per share, and an intraday low of ₹ 744.55 per share. According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, since forming a strong bullish candle on 4th July, the stock has been consolidating within its range of ₹ 710–780. 'Even today, prices opened positively but lacked follow-through buying. A decisive move beyond this range could trigger the next momentum,' Bhosale said.
