Income Tax Act 2025 simplification aims to increase voluntary tax compliance, official says

A senior revenue department official said the Income Tax Act, 2025 is likely to lift voluntary tax compliance. Vikram Sahay, chief commissioner of Income Tax-3, Mumbai, linked compliance to clearer rules. Sahay said simpler language makes it easier for people to follow the law. Sahay made the remarks on Tuesday at an event.

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Sahay said the new law is contemporary and organised in a clearer way. Sahay said this design should lower compliance costs through simplification and rationalisation. Sahay also said a simpler structure can make obligations easier to track. The official added that this clarity should reduce confusion for taxpayers and advisers.

Income Tax Act, 2025 and voluntary tax compliance

He said, "If you have an Act which is simple to understand, it becomes easier to comply. So, voluntary tax compliance will definitely go up because of a simplified Act,\". Sahay presented this view while discussing how clearer provisions can support better compliance. The official linked understanding of rules with smoother filing and fewer errors.

At the outreach programme, Sahay addressed groups affected by the changes. The audience included taxpayers, tax representatives, chartered accountants and trade bodies. Sahay said such sessions help explain how the updated provisions work. Sahay also said the structure aims to help readers follow the law in plain language.

Income Tax Act, 2025 provisions and simplification

Sahay said the earlier Income Tax Act was over six decades old. Sahay said the old law became bulky over time. Sahay added that frequent litigation increased cross-referencing across sections. Sahay said these issues contributed to the drafting of the new Act. The aim was a clearer and more usable legal text.

He said, \"A time had come and it was felt that we should now embark on the process of simplifying that, simplifying the provisions, which is easier to understand, which will reduce litigation, which will help taxpayers in reading it in a plain language and trying to comply with the provisions of the Act,\". The official said the focus is on clearer reading and fewer disputes.

Income Tax Act, 2025 outreach programmes by CBDT

Sahay said the Central Board of Direct Taxes has directed wider public outreach. Sahay said all Principal Chief Commissioners were asked to hold more awareness programmes. The goal is to explain the new provisions and encourage their use. Sahay said this approach should help stakeholders understand changes and comply with less effort.

With inputs from PTI