The Centre is expected to unveil the Direct Tax Code 2025, the simplified version of the income tax laws, in the upcoming Union Budget to be presented on February 1 next year. Once implemented, the Direct Tax Code will replace the Income Tax Act, 1961.
Experts are of the view that the Direct Tax Code (DTC) will completely revamp the income tax laws, which will result in easing of legal hurdles and reducing the litigation burden for individuals, the government and the industry.
The new simplified tax regime is likely to revolutionise India’s taxation framework, feel experts. With a focus on simplifying tax laws, reducing compliance burdens, and aligning with modern economic realities, the DTC 2025 promises significant relief for middle-class taxpayers, they say. According to them, key provisions are expected to include streamlined tax regimes, fewer slabs, and reduced complexities, benefiting individuals with annual incomes between Rs 5 lakh and Rs 15 lakh.
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Simplifying India’s tax framework
Niyati Shah, Vertical Head – Personal Tax, 1 Finance, emphasizes on the pressing need for reform, pointing out that the Income Tax Act, 1961, despite numerous amendments, has become “bulky and less effective, creating challenges for taxpayers and administrators alike.” She highlighted that the DTC 2025 aims to “simplify the tax framework, reduce compliance burdens, and align tax laws with other regulations.”
For individual taxpayers, Shah outlined several key benefits:
Streamlined tax rates and filing processes: “For individual taxpayers, the DTC promises a unified and rationalized tax structure, simplified tax rates, and a more streamlined filing process.”
Clarity in residential status: The categorization will be limited to “Resident” and “Non-resident,” removing the complexities of multiple residential categories like R-OR and R-NOR.
Rationalized tax regime for middle-income earners: “Those with annual incomes between Rs 5 lakh and Rs 15 lakh stand to benefit from the DTC 2025.” However,
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