Income Tax Act of India:Issues and Expected Reforms

Abstract

This paper focuses on the gaps found in the rules in Direct Tax Policy of India. Income Tax Act 1961 is a mature, refined and seasoned tax regime of India. However, there are still many loopholes in the rules which could have been generated due to lopsided view of the effect of the policy or due to generalization of the policy or due to human errors. The paper focuses on finding such gaps and strives to present the directions for further reforms. The methodology used for this paper is a literature review of the published materials. A broad search strategy was used using the key terms like the Income Tax Act, reforms in direct taxes and loopholes in the existing direct taxation system. The major contribution of the paper is to draw the attention towards the loopholes which are extensively used to evade the tax and should be immediately plugged by applying the reforms suggested through this paper.