Government Sees Increased Voluntary Compliance with New Income Tax Act

Tax Authority Seeks to Boost Compliance with Simplified Income Tax Act

The Indian government is set to implement a simplified version of the Income Tax Act, 2025, which is expected to increase voluntary tax compliance, according to a senior revenue department official.

The new Act will be more contemporary and well-structured, allowing for reduced compliance costs through simplification and rationalization. This move comes after the original Income Tax Act, which dates back over six decades, had become voluminous and required extensive cross-referencing following litigations.

Vikram Sahay, chief commissioner of Income Tax-3, Mumbai, emphasized the importance of a simplified Act in promoting voluntary tax compliance. Speaking at an outreach program for taxpayers, tax representatives, chartered accountants, and trade bodies, Sahay stated that a simplified Act would be easier to understand, reduce litigation, and enable taxpayers to comply with the provisions in plain language.

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As part of the implementation process, the Central Board of Direct Taxes has instructed all Principal Chief Commissioners to conduct outreach programs to create awareness about the new provisions and encourage taxpayers to take advantage of them. This effort aims to increase voluntary tax compliance and simplify the tax compliance process for individuals and businesses.