As Budget 2025 approaches, taxpayers eagerly anticipate changes that could simplify the income tax system. With the government's ongoing efforts to revamp the Income Tax Act, there's hope for a more streamlined and efficient tax filing process.
This year's budget proposals are expected to be guided on the principles of "simplicity" and "efficiency." Recent amendments, such as the rationalization of the capital gains regime, adjustments to withholding tax rates, and the introduction of a no-deductions tax regime, all point towards this goal.
One anticipated change is making the old tax regime less attractive compared to the concessional regime. This could involve restructuring tax slabs and rates in the concessional regime while leaving the old regime unchanged, or even scrapping the old regime altogether. Another potential simplification could be eliminating the current law of taxing notional rent from a third property. With property tax already in place, taxing notional rent adds an unnecessary burden and complexity to the tax filing process.
Simplified for NRIs
For non-resident Indians (NRIs), India's tax system can be particularly challenging. The budget could address this by merging the independent tax compliance system for NRI payments with that for resident payees. This would eliminate the need for NRIs to obtain a Tax Deduction and Collection Account Number (TAN), file separate forms, and create different logins.
E-filing may be easy process
The budget could also simplify the e-filing process for NRIs who do not have Aadhaar. Currently, the 30-day deadline for ITR-V verification can be difficult to meet, especially for those living abroad. The government could introduce a system where NRIs without Aadhaar or Indian bank accounts can use a PIN or electronic verification code (EVC) to e-verify their returns.
AI into the play
Artificial intelligence (AI) and other technologies can play a crucial role in simplifying tax compliance. The government's increasing reliance on technology, evident in the annual information statement (AIS) and Tax Information Summary (TIS), has already made the taxation process less complicated.
Budget 2025 holds the promise of further simplifying the Indian tax system, making it more efficient and user-friendly for both individuals and the tax administration. The nation eagerly awaits for measures that will reduce the burden of compliance.
