A revamped Income Tax Act is expected to take more than a year for implementation

India is gearing up for a major overhaul of its Income-Tax (I-T) Act, as announced by Finance Minister Nirmala Sitharaman during the Union Budget in July 2024. However, the new I-T Act is unlikely to be tabled in the upcoming Budget Session and is expected to take more than a year to be implemented, according to sources.

The revamp aims to replace the Income-Tax Act of 1961 with a modern, simplified framework but poses significant challenges in terms of operational readiness. Transitioning to the new Act will involve drafting and notifying new rules, creating updated forms, and integrating supporting systems. The process will require careful calibration to ensure compliance and efficiency without disrupting the current system.

As per senior government officials, “It is likely to take more than a year. Systems have to adapt to the changes. Since it will be a whole new Act, it will be much more complex. All rules and new forms have to be enabled, tested, and system-integrated, and that will require time.”

The comprehensive nature of the changes underscores the need for meticulous planning and phased implementation, highlighting the scale of the task ahead for both policymakers and taxpayers.