Revise India’s income tax rules for simplicity as proposed but don’t let evasion get easier

Subscribe to enjoy similar stories. The draft income tax rules released by India’s government for public comments are a marked improvement on what’s currently in force. For one, the number of rules and forms will almost be halved.

For another, information requests that have become redundant will be done away with. Some forms are being merged. Many more income tax filers will have an easier time filing their returns—they will only be required to edit or okay the pre-filled form they are presented.

While this facility is not new, the categories of taxpayers who can avail of it would widen, although they might need to spend some time on amending the pre-filled data, given the more complex transactions they make. The real hallmark of reform would be when someone with multiple streams of income, including from overseas, no longer needs the help of a professional accountant to file tax returns. That day may come, but has not dawned yet.

The new rules also propose to raise the value threshold of assorted perks provided by an employer, ranging from car allowances to office-paid meals, beyond which their value would be deemed ‘income.’ The list of cities that qualify for the highest level of house-rent allowance eligible for concessional tax treatment is being expanded, at long last, to include major urban centres like Bengaluru, Hyderabad, Pune and Ahmedabad. This is welcome. This might be the right time to move beyond such an eligibility list of cities to a sharper—and far more apt—criterion like a location’s cost-of-living index.