New Tax Code: Union Finance Minister Nirmala Sitharaman has announced that a new tax code or Income Tax Act will be introduced within the next six months to replace the current Income Tax Act of 1961. The proposed changes aim to simplify the tax system by ensuring that the new code is written in clear and accessible language. "At least some parts of the new act will be easy to understand," Sitharaman assured during her address at the 165th Income Tax Day celebrations.


Sitharaman also urged tax officers to communicate with taxpayers in simpler terms to alleviate fear and anxiety. She stressed the importance of clarity and transparency in tax notices and other official correspondence, advising that "disproportionate" enforcement actions should be a last resort. "Your powers should be exercised judiciously, and taxpayers should not be subjected to undue harassment," the minister pointed out.


CBDT Chairman Ravi Agrawal, who was present at the event, said, "We have an important task on hand, and that is the comprehensive review of the Income Tax Act, 1961. The purpose is to make the Act concise, lucid, and easy to read and understand. This exercise is aimed to reduce litigation and provide tax certainty to taxpayers."


ALSO READ | Luxury Yacht Tragedy: Morgan Stanley Chairman Jonathan Bloomer Dies; Mike Lynch's Body Recovered


She further called for tax notices to avoid technical jargon, making them comprehensible to ordinary citizens. "The communication should be straightforward and clear enough for everyone to understand," she added.


Reiterating the role of the tax department, Sitharaman highlighted that the objective is to collect taxes in a "fair and friendly manner," promoting voluntary compliance rather than instilling fear. She also pointed out the need to improve the efficiency of the tax refund process, stressing transparency and fairness as key principles.


The finance minister concluded by reminding tax officers of their responsibility to balance their powers with fairness and integrity, making tax compliance less daunting and more approachable for taxpayers.