CBDT forms committee for I-T Act review; ‘sunset’ clauses to be eliminated

New Delhi: The Income Tax Department has formed an internal committee to review the Income Tax Act, 1961, with the goal of simplifying it for better compliance by taxpayers, according to CBDT Chairman Ravi Agrawal. The committee, comprising income tax officials from across the country, is tasked with identifying areas for improvement, eliminating redundant clauses, and adopting best global practices.

This review is part of a central government-mandated comprehensive examination of the law. Agrawal stated that the committee is focused on cutting redundancies and finding clauses that have become obsolete and can be removed. “The committee has started working on identifying areas of improvement. This is a work in progress,” he said during an event marking 165 years of income tax in India.The committee’s work aligns with the directives outlined in the recent Union Budget, where Finance Minister Nirmala Sitharaman announced a comprehensive review of the Income Tax Act. The review aims to make the law concise, easy to read, and understandable, which will reduce disputes, litigation, and provide tax certainty to taxpayers.

Agrawal assured that the review would be completed within the six-month time frame announced by the Finance Minister. He also emphasised the importance of simplifying tax communication, a factor that is being considered as part of the law’s review, to encourage compliance among taxpayers.

In addition to the review, Agrawal mentioned that the CBDT plans to allocate more officers in the next 10-15 days to expedite the resolution of the substantial number of appeals pending at the Income Tax Department level.

The Income Tax Act, 1961, which originally started in 1922, currently contains 298 sections and 23 chapters. The ongoing review is expected to streamline and modernise the Act, making it more accessible and reducing the burden of litigation for taxpayers.