Why Indian income tax rules are so complex ?



Every time they try to make them simpler, they become more complex and are subjected to interpretations. Then CBDT has to issue explanatory circulars and chartered accounts have different views and eventually there are litigations.

Also there is lack of long term strategy and policy. Many a times Income tax rules are dictated by political pressures.

Do you agree to this ? What could be the solution ?

Why Indian income tax rules are so complex ?
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11 Replies to “Why Indian income tax rules are so complex ?”



  1. taxation is trying to escape black money and finance minister is trying to reduce all those manner so that the money will go in the right hand..



  2. The new proposed DTC (Direct Taxes Code) does simplify quite a lot by removing many of the politically oriented exemptions and concessions so that there is reasonable uniformity in application across the board…… the tax-rate slabs are correspondingly being liberalized and enlarged so that effective rate doesn’t go up….. in my view, the new Code is the best action by Manmohan Singh Govt since it has considerable potential to curb black money and evasion as well.

    The sad part is our own lack of conviction and hope….. there is a wide-spread belief that even this will become complex and amenable to evasion and corruption in due course of time as political power would keep tinkering with the provisions in accordance with their perceived compulsions and opportunities in terms of ‘vote-banks’ and ‘purse-banks’.


  3. If u r tax professional it is good, because simple law making will not give you clientels!
    If U r politician U can try to change as per ur wish in your regim.
    If U are comon man u need not worry it will remain as it is
    If u are business Man then it is useful for u because lack of stratagy will help u to pay minimum tax


  4. My opinion is that they are not complex

    One has to understand the whole aspect

    1) Example:
    If in one family there are 2 members then rules & regulations are simple and can easily be followed. Like News at 8 PM dinner at 9 PM, sleeping at 10PM
    Now suppose a child is born so mother & father at many times have to do dinner separately
    sometime Mother & father will also have there sleeping time affected if child will sleep late
    Now suppose another child is born after 3 years
    So 1st child will look cartoon & father cannot watch news
    Sometimes he will have to come from office early so that newborn baby could be taken to doctor for check up.

    So rules & regulation gets mess up when family is big
    The contradiction itself arises in rules though no body wanted the complexity & contradictions

    Similarly, European nations are small in size so there rules are simpler
    Whereas India has so many communities & different type of geographical landscapes & conditions that rules themselves look complex, contradictory.

    Only solution to this problem is money.
    Now suppose if in above example family was rich then
    they could have a maid to look after child
    A second TV where father can watch news & let child watch cartoon on another TV
    A doctor would have been called up home for child check up

    So rules would have remain simpler & easy.

    Countries like USA are rich thats why there rules are simpler
    Govt. is not that dependent on common man for taxes like India
    USA is oil/petrol rich country & rich in technology too.

    Where as India is poor country
    It many states are poor then African nations as heard in news few months earlier
    A general person see big cities of India and say it is rich nation but that’s wrong view.

    We see Indian girls are many times not liked by society. They are abused
    So govt. has given separate taxation slabs for them so that there morale be boosted
    & they could also stand better among men.

    So income tax rules size became bigger as we brought separate tax slab for female.
    So India’s size, structure, its different communities , its expectations to achieve various goals for various people etc. makes these rules big, contradictory


  5. Income tax rules are so complex because every year amendment comes in this Act due to this it becomes complex.Now government is planning to replace it with Direct Tax Code Bill which is supposed to come in effect from 1-4-2011.


  6. The reason behind the complexity in assessing income are the frequent but necessity of the governent anywhere however the role of the concerned authority is dormant which is mostly agreeable to a taxpayer in developing countries.
    I remember the quotes of Georg Bernard shaw he has said the difficult thing to understand is taxation.



  7. Yes, yes, agree – but when the Income Tax is friendly, the Department gets the directions from superior level how to do things. In a democratic nation, if anybody gets the right for execution, it would be a chance for the individual to become fat. So more than a complexity, the administration looks to avoid the potholes and loopholes for the individual officers. Still the Offiers make gains by his/ her own way and if they are not ready, there are private sector to teach and train to keep the rules more complex – make black records into white.
    However, this complexity of Income Tax is a matter connected to every Indian all over the world. As long as the Private Sectors are encouraged by the Government, more individual would be below poverty line and if on the contrary – Government directly manage every sector, the individual should get compulsory EDUCATION in Law and Obedience. UNDER THE Govt. direct control





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