Industry Leaders Advocate for Clarity and Efficiency in New Tax Framework
FinTech BizNews Service
Mumbai, February 28, 2025: Bangalore Chamber of Industry and Commerce (BCIC), today held a seminar on Direct Tax Code vs Income Tax Act 1961 - key differences and Challenges. The seminar was addressed by eminent taxation experts including K R Sekar, Past President and Mentor, Direct Taxes Expert Committee, BCIC and Partner, Deloitte Touche Tohmatsu India LLP; H Padamchand Khincha, Partner, H C Khincha & Co; P V Srinivasan, Partner and Chief Mentor, PVS Advisors. The seminar was moderated by Sriram Ranganathan, Co-Chairman, Direct Taxes, Expert Committee, BCIC and VP & Global Tax Head, Wipro Ltd.
In his opening remarks, K Ravi, Vice President, BCIC said, "The introduction of the Direct Tax Code 2025 marks a significant step towards a fairer, simpler, and globally competitive tax regime. This long-awaited reform is designed to enhance tax compliance, improve transparency, and create a more investment-friendly environment. While the transition will require adaptation, particularly for businesses and professionals, the long-term benefits far outweigh the initial challenges. India is poised to strengthen its economic landscape, signalling to the world its commitment to a progressive and efficient tax system."
K R Sekar, Past President and Mentor, Direct Taxes Expert Committee, BCIC and Partner, Deloitte Touche Tohmatsu India LLP said, “There is a significant expectation gap between taxpayers, tax professionals, policymakers, and the Government of India. Taxpayers seek simplicity, expecting a new Income Tax Act to make compliance easier. The Income Tax Department, however, aims for amendments that expand its tax net. The challenge lies in balancing these conflicting objectives. The government should be complimented for bringing out the Income Tax Act 2025, which is a laudable effort, and also to be complimented for making it simple for the people to read and understand. It's important that both taxpayers and department officials should not do an interpretation of what was done earlier, but make it simple for administration so that the disputes get prevented. The tax Administration needs structural reforms . The tax officers should be categorized—one handling assessments without revenue targets, another focusing solely on tax collection, and a third acting as a relationship manager for key taxpayers. The efforts are being made by the government on substantive tax provisions but a structural change in tax administration will reduce the tax litigations. True tax reform requires clarity, dispute prevention, and streamlined resolution mechanisms. The ultimate goal should be a system where both taxpayers and tax authorities operate with transparency, fairness, and mutual understanding."
P V Srinivasan, Partner and Chief Mentor, PVS Advisors said, “The challenge before us today is determining whether the obligation to read the new Bill considering the objective of simplification of the tax administration be on the taxpayers or the administration. If the obligation lies solely with the taxpayers, the complexity arising out of the Bill will be overwhelming. Further, this Bill retains references to the Income Tax Act of 1961, requiring every taxpayer to cross-check both laws. Ambiguities remain in the transition provisions regarding the TDS credits under the 1961 Act to be carried forward. Another critical issue is the lack of an efficient appellate mechanism. With over 500,000 pending appeals and disputed claims exceeding ₹14 lakh crore, the system is burdened by delays. The absence of mandatory timeframes for appeal disposal risks frustrating taxpayers’ rights. Similarly, the reassessment provisions have been expanded, increasing their scope. For an administrative reform aiming at simplification, it must prioritize clarity, efficiency, and taxpayer rights. Without addressing these fundamental concerns, there is a risk of simplification remaining an unfulfilled promise."
Padamchand Kincha, Partner, H C Khincha & Co said, "The new Income Tax Act introduces a significant shift in terminology and interpretation, particularly in defining income accrual and tax obligations. While the stated intent is simplification, the rewording of key provisions has, in some instances, created ambiguity that may lead to greater litigation rather than ease of compliance. For instance, changes in royalty taxation now expand the scope of income deemed to arise in India, even when transactions occur between non-residents with no direct link to India. The revised definitions of ‘permanent establishment’ and ‘additional tax’ also suggest a broader tax liability framework that requires further clarification. Additionally, replacing terms such as ‘notwithstanding’ with ‘irrespective of’ may have unintended consequences, leading to the mandatory override of existing provisions without clear justification. Such modifications, without an accompanying explanatory memorandum, create uncertainty for taxpayers and businesses alike. While regulatory updates are necessary, they must be aligned with clarity, intent, and practical implications. We urge stakeholders to engage in further dialogue to refine these provisions in a manner that truly simplifies compliance and upholds the integrity of tax law."
In his closing remarks, Sriram Ranganathan, Co-Chairman, Direct Taxes, Expert Committee, BCIC and VP & Global Tax Head, Wipro Ltd said,” A well-structured, forward-looking tax framework is essential for fostering economic growth, and discussions like these play a vital role in shaping a system that is both transparent and efficient. While the new proposals bring certain simplifications, there remains an opportunity to refine and enhance the framework further. As an industry, it is our collective responsibility to continue advocating for necessary changes that support a fair and sustainable tax regime. We encourage stakeholders to share their insights and concerns, as we remain committed to engaging with policymakers and representing industry viewpoints.”
