Union Budget 2024: FM Announces Review of I-T Act 1961 and Vivad Se Vishwas Scheme to Resolve Pending Tax Disputes
By: Admin
July 24, 2024
Categories: Income Tax News|News
Union Budget 2024: FM Announces Review of I-T Act 1961 and Vivad Se Vishwas Scheme
On July 24, 2024, during the presentation of the Union Budget 2024-2025, Union Finance Minister Nirmala Sitharaman unveiled a series of reforms aimed at simplifying taxation, enhancing taxpayer services, and reducing litigation. This budget marks a significant step towards achieving these objectives, with key announcements focusing on the Income Tax Act, 1961, and the introduction of the Vivad Se Vishwas Scheme to resolve pending tax disputes.
Simplification and Digitalization Initiatives
In her address to Parliament, Finance Minister Sitharaman highlighted the government’s commitment to digital transformation across tax administration. She announced plans to digitalize all major taxpayer services under GST, Customs, and Income Tax within the next two years, aiming to streamline processes and eliminate paperwork. This move is expected to not only enhance efficiency but also reduce compliance burdens for taxpayers and logistics costs for businesses.
Review of Income Tax Act, 1961
A major highlight of the budget was the announcement of a comprehensive review of the Income Tax Act, 1961. The Finance Minister emphasized the need to make the tax legislation more concise and understandable, thereby providing greater clarity and certainty to taxpayers. This review aims to simplify provisions, reduce ambiguities, and ultimately minimize tax disputes and litigation. The proposed changes are set to be implemented within six months, reflecting the government’s proactive approach towards tax reform.
Vivad Se Vishwas Scheme
Addressing the issue of pending tax disputes, Sitharaman introduced the Vivad Se Vishwas Scheme, 2024. This scheme is designed to provide a resolution framework for taxpayers involved in litigation concerning direct taxes. It offers incentives for taxpayers to settle disputes by waiving interest and penalties on the disputed tax amount if paid before a specified date. The scheme aims to unclog the judicial system and enable taxpayers to resolve disputes in a timely and efficient manner.
Taxation Measures and Amendments
The budget also proposed several amendments aimed at simplifying tax assessments and reducing uncertainty for taxpayers. One notable proposal includes revising the reassessment process to restrict the reopening of assessments to cases where escaped income exceeds Rs 50 lakh, up to a maximum of five years from the end of the assessment year. Additionally, the time limit for reassessment in search cases has been reduced from 10 years to six years before the year of search.
Charities and TDS Simplification
In a move towards simplifying tax regulations for charities, the Finance Minister proposed merging two tax exemption regimes into one. Furthermore, amendments were introduced to streamline the Tax Deducted at Source (TDS) rates, consolidating various rates into more simplified structures. These changes are aimed at reducing compliance burdens and promoting ease of doing business for charitable organizations and other taxpayers affected by TDS provisions.
Digital Transformation in Tax Administration
Recognizing the benefits of digitalization, Sitharaman emphasized the expansion of digital services across GST, Customs, and Income Tax domains. This includes digitizing services such as rectification and order processing for appellate orders, aiming to improve transparency, efficiency, and accessibility for taxpayers. The transition towards a paperless system is expected to facilitate faster processing times and reduce administrative delays associated with traditional paper-based processes.
Impact on Trade and Industry
The budget also addressed amendments to GST laws aimed at facilitating trade and reducing tax burdens on specific industries. Amendments include excluding Extra Neutral Alcohol from central tax purview, simplifying input tax credit provisions, and providing a common time limit for issuing demand notices and orders. These changes are intended to promote ease of compliance and reduce the compliance burden on businesses operating under GST regulations.
Legal and Compliance Framework Enhancements
To strengthen the legal framework, the budget proposed amendments to appeal procedures and pre-deposit requirements. The maximum pre-deposit amounts for filing appeals with the Appellate Authority and Appellate Tribunal have been revised to reduce financial burdens on taxpayers seeking legal remedies. Additionally, changes were introduced to streamline the time limits for filing appeals, ensuring timely resolution of tax disputes and preventing appeals from becoming time-barred.
Future Outlook and Conclusion
In conclusion, the Union Budget 2024-2025 represents a significant milestone in the government’s efforts to reform India’s taxation system. By focusing on simplification, digitalization, and reducing litigation, the budget aims to create a more taxpayer-friendly environment while enhancing efficiency and transparency in tax administration. The introduction of the Vivad Se Vishwas Scheme and amendments to the Income Tax Act, 1961, underscore the government’s commitment to resolving tax disputes and promoting economic growth through a stable and predictable tax regime.
As India continues its journey towards economic recovery and sustainable development, the initiatives outlined in the budget are poised to play a crucial role in supporting businesses, encouraging investment, and fostering a conducive environment for economic prosperity.
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