New Delhi [India], October 25 : SBI Research in a report has advocated for quicker review of the Income Tax Act as announced in Budget 2024-25.
The report recommended that the revised Act be introduced as a money bill so that it can be passed within stipulated 75 days. This will not only simplify and streamline taxation process but also aligned with economic growth and inclusivity.
The report recommended raising the TDS threshold on bank interest payments from Rs 10,000 to at least Rs 100,000. Allowing annual issuance of TDS certificates (Form 16A) instead of quarterly, aligning it with Form 16 for salaries, since Form 26AS is primarily used for credit and a flat tax rate for individuals earning over Rs 8 lakhs, specifically for those aged 60 to 80, with additional provisions for individuals aged 80 and above.
Earlier this month, the Central Board of Direct Taxes (CBDT) has formed an internal committee to oversee a comprehensive review of the Income-tax Act, 1961 (Act), as was announced in the Union Budget 2024-25 by Finance Minister Nirmala Sitharaman.
The goal is to make the Act concise, clear, and easy to understand, which will reduce disputes, and litigation, and provide greater tax certainty to taxpayers.
The committee invites public inputs and suggestions in four areas simplification of the Act; reducing litigation; streamlining compliance; and removal of redundant/obsolete provisions.
In SBI Research's view, this approach is aimed at addressing the practical challenges faced by taxpayers, accountants, and legal professionals, ensuring that their real-world experiences help shape the reforms.
"So, all the stakeholders should participate in evolving tax legislation, which will govern them in future," SBI Research urged.
Further, the SBI Research report authored by SBI's Group Chief Economic Adviser Soumya Kanti Ghosh said with an increasing alignment with progressive taxation regime, contribution of direct taxes to total tax revenue reached 56.7 per cent in assessment year 2024 (54.6 per cent in 2023), the highest in 14 years. The growth rate of Personal income tax (PIT) collections has been surging faster than Corporate tax collections since 2020-21, with PIT increasing by 6 per cent against CIT's 3 per cent growth.
"Direct taxes to GDP ratio inched up to 6.64 % in AY24, highest since 2000-01, vindicating the results of improving tax compliance," said the report.
ITRs filed during 2024 witnessed a phenomenal jump, standing at 8.6 crore (against 7.3 crore in 2022). A total of 6.89 crore or 79 per cent of these returns were filed on or before the due date.
SBI Research believes the total number of ITRs filing for 2025 could swell more than 9 crore by end March 2025.
States such as Maharashtra, Delhi, Gujarat and Karnataka, which have been traditional leaders in income tax base are nearing saturation in ITR filing while UP, Bihar, AP, Punjab and Rajasthan are gaining share in incremental growth of filers.
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