The New Income Tax Regime is set to bring significant structural changes ahead of its implementation from April 1. Among the major proposals under consideration are a shift to monthly TDS returns instead of the current quarterly system and a possible recast of the House Rent Allowance (HRA) tax rule. These proposals are part of 13,600 public suggestions received by the income tax department during consultations on the draft tax rules and forms.
The New Income Tax Regime aims to simplify compliance, improve transparency, and modernize tax administration. Out of the total suggestions received, around 450 recommendations have been shortlisted for further deliberation. These submissions came from tax professionals, industry chambers, chartered accountants, and policy experts.
Monthly TDS Returns Under the New Income Tax Regime
One of the most discussed proposals under the New Income Tax Regime is the introduction of monthly TDS returns. Currently, businesses file TDS returns quarterly, which can delay reconciliation and compliance tracking. Moving to monthly TDS returns may improve real-time reporting and reduce year-end compliance burdens.
Experts believe that monthly TDS returns under the New Tax Regime could strengthen transparency and plug revenue leakages. Faster reporting may also help employees claim accurate tax credits without discrepancies. However, small businesses have raised concerns about increased compliance workload if adequate digital support is not provided.
The government is evaluating whether the compliance benefits of monthly TDS returns outweigh the administrative challenges. If implemented, this reform would mark one of the biggest compliance shifts under the New Income Tax Regime.
HRA Tax Rule Recast on Wish List
Another major suggestion under the New Tax Regime is revisiting the HRA tax rule. At present, House Rent Allowance exemptions depend on salary structure, rent paid, and city of residence. Many stakeholders have recommended simplifying the HRA tax rule to reduce calculation complexities.
Under the New Tax Regime, there is growing demand to rationalize exemptions and align them with simplified tax slabs. Some tax experts argue that the HRA tax rule should either be standardized or replaced with a simplified deduction mechanism.
The recast of the HRA tax rule could impact salaried taxpayers significantly. Since housing costs vary widely across cities, policymakers are carefully reviewing suggestions to ensure fairness while maintaining revenue neutrality.
13,600 Suggestions Signal Strong Public Participation
The response to the New Income Tax Regime consultation process has been substantial. Over 13,600 suggestions were submitted, indicating high stakeholder engagement. Out of these, about 450 suggestions have been identified as relevant for detailed evaluation.
Many suggestions focus on simplification of tax forms and renaming income tax returns based on their utility. Stakeholders have recommended user-friendly return formats, reduced annexures, and better digital integration. These proposals align with the broader goal of the New Tax Regime — ease of compliance.
The government’s approach indicates a consultative reform process rather than abrupt structural changes. This strengthens confidence among taxpayers and industry participants.
Simplification at the Core of the New Income Tax Regime
The Income Tax Regime was originally introduced to provide lower tax rates with fewer exemptions. However, feedback suggests that more simplification is required in procedural compliance, not just slab rates.
Monthly TDS return, HRA tax rule recast, and simplified return forms are all aimed at creating a smoother tax ecosystem. As the April 1 implementation date approaches, clarity on which suggestions will be adopted is expected soon.
If implemented carefully, the Income Tax Regime could reshape India’s tax compliance framework by making it more digital, transparent, and efficient.
What Taxpayers Should Watch
Taxpayers and businesses should closely monitor announcements regarding monthly TDS returns and changes to the HRA tax rule. Any reform under the New Income Tax Regime may directly impact payroll processing, salary structuring, and compliance timelines.
With deliberations ongoing, final decisions are expected before the new financial year begins.
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