With the Income Act 2025 expected to be implemented from April 1, 2026, onwards, taxpayers may still have questions on how the government plans to simplify the rules. The Income Tax Bill primarily aims to simplify the tax laws of the country.
Speaking to NDTV Profit, Clear Tax founder Archit Gupta clarified how the simplification proposed in the new Income Tax Act will work. He highlighted that the government seeks to simplify the tax system by having access to reliable, real-time financial data.
Tax authorities can track revenue and costs more accurately now due to digital reporting from banks, credit card companies, brokers, stock exchanges, mutual funds, and even foreign transactions. This strong data ecosystem allows the government to reduce complexity in tax rules while still ensuring correct tax collection.
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"We have trust on our digital data systems of the IT department and trust in the various kinds of reporting now that we demand real time from your bank, from your credit card company, from your broker, from the exchanges, from the mutual fund depositories from pretty much like the foreign transactions that you do the foreign travel that you do some the reporting from international governments," Gupta said,
"The government has trust on its data and AI systems where it believes it can gather the real time data about you and then make simplification in the Income Tax Act make certain simplification and still collect the appropriate amount of taxes from its citizens," he added.
This accessibility to reliable data acts as a foundation to simplify tax processes in India. "That's the underlying bedrock foundation on which all this simplification is coming about."
Additionally, more people are investing in the markets now. "The financialization of India continues....even last year, despite all the changes, we had 20% growth in the demat accounts of the country. Commodities are trading with gold, silver at an all time high. Went up quite a bit in the country. The data is very clear on that. So, overall, the financialization of participation in equity markets is much more and much deeper," Gupta said.
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