Rationalise rates, set up tribunal to streamline tax system
The delay is raising concerns over clarity on critical issues such as rate rationalisation. For instance, following the personal income tax relief in the February budget, none other than Finance Minister Nirmala Sitharaman confirmed that GST rates will fall further. She also reasoned that the revenue-neutral rate, at which tax revenue remains the same despite changes in tax laws, reduced from 15.8 percent in 2017 to 11.4 percent in 2023; more correction is expected.
A ministers' group set up for this task has submitted its report, but analysts expect the need for at least two or three council meetings to arrive at a final decision. The next meeting, whenever it happens, must take up the rationalisation process including reducing tax slabs and streamlining rates. For one, it should take a call on lowering the rate on health and life insurance premiums from 18 percent to 5 percent. And the long-delayed GST Appellate Tribunal needs to be set up soon, as its absence affects both taxpayers and the government.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
37 minutes ago
- Hans India
New Income Tax Act to turbocharge growth, cut litigation: Panda
BJP leader Baijayant Panda, the chairman of the Parliamentary Select Committee that scrutinised the Income Tax Bill 2025, on Monday said, 'This new Act will further turbocharge growth by making taxes easy to understand and easy to comply with, thus reducing disputes and litigation.' He congratulated Finance Minister Nirmala Sitharaman on the passage of the modified Income Tax Bill, 2025 in the Lok Sabha. 'The leadership of Prime Minister Narendra Modi has seen the repeal and overhaul of well over 1,500 laws, helping India become the fastest growing and now the 4th-largest economy in the world,' he remarked. The Income Tax (No 2) Bill, 2025, was passed shortly after Finance Minister Nirmala Sitharaman tabled the revised Bill, incorporating most of the recommendations made by the Parliamentary Select Committee in the Lok Sabha amid an Opposition uproar. The revised Bill would improve fairness and clarity while aligning the law with existing provisions. The new draft aims to provide lawmakers with a single, updated version that reflects all suggested changes, the Finance Minister explained. FM Sitharaman said that suggestions were received which are required to be incorporated to convey the correct legislative meaning. "There are corrections in the nature of drafting, alignment of phrases, consequential changes and cross-referencing," she said, adding that the earlier Bill was pulled back to avoid confusion. The updated Income Tax Bill 2025 incorporates 285 suggestions from the Parliamentary Select Committee. The new legislation aims to simplify tax processes and address previous shortcomings, potentially reshaping the Income Tax landscape in the country. Last week, the Income Tax Bill, 2025, which was introduced in the Lok Sabha on February 13 to replace the existing Income Tax Act, 1961, was formally withdrawn by the government. According to Panda, who chaired the Parliamentary Select Committee responsible for reviewing the legislation, the new law, once passed, will simplify India's decades-old tax structure, cut down legal confusion, and help individual taxpayers and MSMEs avoid unnecessary litigation. The current Income Tax Act of 1961 has undergone more than 4,000 amendments and contains over 5 lakh words. It has become too complex. The new Bill simplifies that by nearly 50 per cent -- making it far easier for ordinary taxpayers to read and understand, according to Panda. The parliamentary panel had flagged multiple drafting errors and suggested amendments to reduce ambiguity. In the revised Bill, slabs and rates have been changed across the board to benefit all taxpayers. The new structure substantially reduces the taxes of the middle class and leaves more money in their hands, boosting household consumption, savings and investment, according to the government.
Time of India
2 hours ago
- Time of India
Changes in tax on lumpsum and premature withdrawals under UPS and NPS in the latest version of Income Tax Bill
Income tax exemptions for UPS FM Nirmala Sitharaman, in today's Lok Sabha session, introduced the Taxation Law (Amendment) Bill, 2025, which is further set to amend the Finance Act, 2025 and the Income Tax Act, 1961. Most of the changes herein focus on bringing UPS on par with NPS in terms of tax treatment . Here are some major changes that have been presented in the Taxation Law (Amendment) per the bill, any payments from the NPS Trust to a UPS (United Pension Scheme) subscriber, which do not exceed 60% of the individual's corpus at the time of superannuation, voluntary retirement or retirement, shall be exempt from income to the bill, 'any payment from the National Pension System Trust to an assessee, who is a subscriber to the Unified Pension Scheme , to the extent that it does not exceed sixty per cent of the individual corpus, as specified in notification number FX-1/3/2024-PR, dated the 24th January, 2025 of the Department of Financial Services, made at the time of his superannuation or voluntary retirement or retirement under clause (j) of rule 56 of the Fundamental Rules [which is not treated as penalty under the Central Civil Services (Classification, Control and Appeal) Rule.'Furthermore, the bill states that, 'any sum received as a lump sum amount as per clause (vi) of paragraph 2 of the notification number FX-1/3/2024-PR, dated the 24th January, 2025, of the Department of Financial Services, by an assessee being a subscriber to the Unified Pension Scheme will also be tax per law, a lump sum payment will be allowed on superannuation at the rate of 10% of monthly emoluments (basic pay + Dearness Allowance) for every completed six months of qualifying service. Moreover, this lump sum payment will not affect the quantum of assured bill further adds that, 'where any amount standing to the credit of the assessee, being a subscriber to the Unified Pension Scheme, in his account referred to in sub-section (1) or sub-section (1B), in respect of which a deduction has been allowed under those sub-sections or sub-section (2), together with the amount accrued thereon, if any, is received by the assessee or his nominee, in whole or in part, in any previous year on account of his superannuation or voluntary retirement or retirement under clause (j) of rule 56 of the Fundamental Rules [which is not treated as penalty under the Central Civil Services (Classification, Control and Appeal) Rules, 1965], as may be applicable, the whole of the amount shall be deemed to be the income of the assessee or his nominee, as the case may be, in the previous year in which such amount is received, and shall accordingly be charged to tax as income of that previous year.'Simply put, if the UPS subscriber or their nominee receives any amount from the scheme before their superannuation, retirement or voluntary retirement, the same will be treated as income in the hands of the individual and taxed CA Ashish Niraj, Partner, A S N & Company Chartered Accountants explains, this subsection has been inserted to clarify that in case the assesee closes the account or opt out of pension scheme referred to in sub-section (1) or sub-section (1B) then such amount will be deemed to be his income in that previous year and will be CA Mohit Gupta, 'if an assessee (subscriber to the Unified Pension Scheme) receives any amount (including accrued income) from their pension account—where deductions were claimed earlier under Section 80CCD(1), (1B), or (2)—on superannuation, voluntary retirement, or retirement under Rule 56(j) of the Fundamental Rules (not treated as penalty), the entire amount will be treated as taxable income in the year of receipt'.According to CA Gaurav Makjhiani, tax lead at Roedl & Partner, this clarification is introduced to ensure complete parity in tax treatment between the two schemes. For relevant employees, this removes a major barrier to adopting UPS, as the same deductions for contributions and exemptions on withdrawals are now according to the bill, if the balance outstanding in the individual corpus is transferred to the pool corpus on his superannuation, voluntary retirement or retirement, the same will not be treated as income of the assessee in that year. As per CA Ashish Niraj, Partner, A S N & Company Chartered Accountants, this is merely shifting funds from individual corpus to pool corpus for annuity purposes, and hence, does not invite taxes.
India Today
2 hours ago
- India Today
New Income Tax Bill approved: What's new after withdrawal of earlier draft
The Lok Sabha has passed a revised version of the Income Tax Bill, 2025, just a week after the earlier draft was withdrawn. The updated Bill, presented by Finance Minister Nirmala Sitharaman on August 11, incorporates most of the recommendations made by the Select Committee and aims to replace the six-decade-old Income Tax Act, THE EARLIER BILL WAS WITHDRAWNThe first draft of the Income Tax Bill was introduced in February this year as part of the most significant reform to India's direct tax code in more than sixty years. However, the government decided to pull it back last week to make certain corrections and the move in Parliament, Sitharaman said the changes included refining the language, aligning phrases, making consequential changes, and improving cross-referencing. She pointed out that the revised draft was intended to give lawmakers a single, clear version to work with and to prevent any CHANGE REGARDING COMMUTED PENSIONOne of the key updates in the revised Bill is an explicit tax deduction for commuted pension, lump sum pension payments, for certain taxpayers. This applies to those receiving pensions from specific funds listed in Schedule VII of the Bill, such as the LIC Pension the earlier draft, this exemption was not clearly stated, which led the Select Committee to recommend its inclusion. The Committee noted that the change was needed to ensure fair tax treatment for non-employees receiving pensions from approved funds, similar to the relief already given to employees. According to Dinesh Kanabar, CEO, Dhruva Advisors, "While we study the provisions of the amended Bill, we see some very welcome changes. There were a number of provisions against which representations were made to select committee. These have now been accepted in the Bill presented today."He added, "To give a few examples, the provisions of levying Alternate Minimum Tax on LLPs has been done away with, the rigours placed on Charitable Trust have been removed, the provisions of Transfer Pricing and the definition of Associated Enterprise to whom these provisions apply, have been relaxed."Kanabar further noted that, regarding charitable trusts, the new Bill proposes to restore the capital gains tax reinvestment benefit and the option to utilise funds in the following year. For individuals, the clarifications on claiming standard deduction for income from house property after municipal tax payment, as well as the deduction of pre-construction interest on let-out properties, are positive FEATURES OF THE WITHDRAWN DRAFTThe February draft sought to simplify India's tax law by using clearer language, consolidating deductions, and shortening provisions. It also proposed lower penalties for some offences, a 'trust first, scrutinise later' approach to reduce disputes, and modernised tax administration through greater digital monitoring and stronger CBDT these changes, the earlier version did not alter tax slabs, capital gains rules, or income categories. It kept the same residency criteria and financial year timelines while streamlining TDS rules and simplifying depreciation the revised Bill now approved by the Lok Sabha, the legislation takes a major step towards replacing the 1961 Act, potentially reshaping India's income tax system for decades to come.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- EndsMust Watch
