The New Income Tax Law is set to become a reality soon. Union Finance Minister Nirmala Sitharaman will table the new legislation in Parliament on Thursday .
Upon accesssing the first draft of the bill, we have realised that this is quite in line with what is being expected from it. It is certainly shorter, succinct and simpler to read piece of law.
“There are no jargons in the new law, there won’t be any scratching of head over understanding the provisions. There will be fewer errors while filing the return and taxpayers will hopefully get a smoother experience. The new tax regime is the default option in it. So, those taxpayers who want to opt for the old tax regime will have to opt out of the new regime,” says CA Chirag Chauhan, a Mumbai-based chartered accountant.
These are key points to know
1. Fewer pages: Income Tax Act 1961 has 823 pages as amended in 2024 where as the new income tax bill is spread across 622 pages. So it is shorter by 201 pages.
2. Number of sections: There are 536 sections, 23 chapters and 16 schedules. Despite having more number of sections, it is shorter because there are fewer explanations and provisos.
3. Standing committee: Once this is passed in the Parliament, it will be referred to the Parliamentary standing committee on finance which will start the consultation.
4. Tax audit: Under Presumptive income tax limit, they have given a range, now between this range, the tax audit applicable.
5. Limits raised: The 44AD limit has been raised for business from 2 crore to 3 crore, whereas for professionals, it has been raised from ₹50 lakh to ₹75 lakh.
6. Last dates: The Tax audit filing date has been extendeed from Sept 30 to Oct 31 and for tax income tax filing, the last date has been extended from Oct 31 to Nov 30.
7. Audit by CAs: There were earlier speculations that the scope of tax audit would be extended to include CS and CMA as well. But the section Sec 515 (3)(b) mentions that the accountant means chartered accountant. This has appaently given a sigh of relief to the CA community.
8. Tax year: Unlike the concept of previour year (year for which income tax is computed) and assessment year (year wherein tax is computed), now it is known as the tax year. This will improve the tax terminology among the lay persons.
9. Capital gains: Long term capital gain (LTCG) and short term capital gains (STCG) remain the same as they were introduced the last year.
10. Digital transactions: There is an encouragement of sorts for digital transactions with audit relief of upto ₹10 crore turnover.
