Indian taxpayers are looking toward the upcoming Union Budget with great anticipation. They have several key expectations from the Finance Minister this year. Their wishlist focuses on simplifying the tax system and addressing pressing national issues.
One Nation, One ITR Form
Currently, taxpayers must navigate seven different Income Tax Return forms. This variety often causes confusion. People must determine the correct form each year based on their income sources and other parameters. Since income sources can change annually, the applicable ITR form may also vary.
The government previously considered introducing a single, uniform ITR form for all taxpayers. This move would make tax filing much simpler and more user-friendly. With the New Income-tax Act set to take effect, now is an ideal time to revisit this proposal.
A single ITR form could allow taxpayers to select their entity type and income sources. After this selection, only relevant pre-filled schedules would appear. This approach would streamline the return filing experience significantly.
Master Circular for the New Income-tax Act
The New Income-tax Act will become applicable from April 1, 2026. Over the past six decades, numerous circulars and notifications have been issued under the old Income-tax Act of 1961.
It would be highly beneficial to issue a master circular. This document would list all circulars applicable as of April 1, 2026, referencing the new sections in the New Act. Circulars related to deleted sections would be removed.
Updating and reissuing this Master Circular annually would help taxpayers reference the correct guidelines. This step aligns perfectly with the government's goal to simplify income-tax law.
Reforming Tax Deduction at Source
TDS compliances currently consume considerable time. There is an urgent need to revamp the TDS framework, potentially in a revenue-neutral manner.
Studies could identify TDS sections with high collections. Sections with insignificant contributions might be deleted or merged. Any resulting shortfall could be adjusted in advance tax calculations.
Prescribing only two or three TDS rates would make compliance easier for taxpayers. Additionally, the requirement to issue TDS certificates should be removed, as this information is already available in Form 26AS and the Annual Information Statement.
Implementing a TDS Ledger mechanism could prevent litigation over income and TDS matching. Together, these measures would substantially reduce the compliance burden on taxpayers.
Using Tax Policy to Combat Air Pollution
Many Indian cities regularly appear on lists of the world's most polluted cities. Several countries have issued travel advisories for India highlighting pollution concerns. Tackling this challenge requires a multi-pronged approach.
The direct tax law could serve as an enabler by offering special tax incentives for purchasing Electric Vehicles under the new individual tax regime. Although government policy favors lower taxes with fewer deductions, an exception could be made due to the health emergency caused by air pollution.
Taxpayers could also be encouraged to allocate a portion of their CSR spending to support pollution control research and government-approved schemes in their operating cities. This expenditure should be specifically permitted as tax-deductible.
While these measures alone may not resolve the pollution crisis, they would support broader government efforts to improve air quality.
Conclusion
Some taxpayer expectations align with the government's stated intent to simplify India's taxation regime. Others reflect a public wishlist aimed at addressing the severe health hazards of air pollution. Taxpayers across the nation hope the government will consider these proposals favorably in the upcoming budget.
