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The government has embarked on the exercise to comprehensively rewrite the Income-Tax Act 1961. Aimed at formulating a brand new I-T Act, the revenue department has formed four internal groups, with specific mandates to review the Act from different perspectives, according to official sources.
The four groups would report to an internal committee headed by Central Board of Direct Taxes (CBDT) member (legal) M.H. Kherawala. The plan is to re-formulate the Act in a compact manner much before the Budget 2006-07. “We hope that the new Act could be notified shortly after next Budget,” a senior official said. The four groups would attempt to rationalise the Act by doing away with superfluous sections and sub-sections. There would be a conscious effort to make the Act compatible with the foreign tax laws. To begin with, the exercise would be confined to the government.
“Once we come closer to a draft, we might draw inputs form outside,” said the source. Simplification of the provisions related to penalties and offences would be an important task before one of the groups, while another one would focus on trimming the size of the Act and the rules thereunder for the sake of lucidity.
A third group would look at the refunds, recovery and settlement provisions, with a view to cut delays and redundancies. International taxation — transfer pricing, taxation of non-residents, double taxation avoidance etc — would be overhauled by the fourth group. FM P. Chidambaram had said in the last Budget that the I-T Act had, over the years, has become complicated, and hinted at a revamp.
