Even if a new I-T Act is enacted, it would be a meaningless exercise if the main evils of repeated amendments, tax evasion and corruption are not tackled.

The Income-Tax Act, 1961 is soon to be replaced by a simplified version. The draft Bill is to be ready early next year. Any attempt at simplifying the law is bound to be greeted with scepticism.

The 1922 Act was replaced by the 1961 Act with the avowed object of bringing stability to the law. N. A. Palkhivala, in the preface to the 7th edition of his celebrated commentary The Law and Practice of Income Tax, pointed out that the 1961 Act was the result of many anxious months spent by the first Law Commission in finalising the new draft.

A Select Committee considered the Bill for weeks and it was debated in Parliament for several days.

But the 1961 Act was amended more number of times in its first six years than the 1922 Act had been in 40 years. By 1990, the Act had been amended 3,300 times. And the spate of needless amendments continues unabated. For example, it is difficult to fathom the logic of reducing corporate tax and simultaneously introducing fringe benefit tax (FBT).

Each year, the Act is tinkered with and every time there is a Supreme Court judgment in favour of the assessee, it is promptly nullified with retrospective effect.

The Oxford Dictionary defines oxymoron as a figure of speech in which apparently contradictory terms appear in conjunction. If the past is any indication, simplification and income-tax do not seem to go together.

What is the point in having a new I-T Act when it is bound to be repeatedly amended and altered beyond recognition in a few years? Indeed, there is no reason or justification for having a new I-T Act at all. It would be easier to apply Paretos well-known 80:20 principle.

A major part of the litigation is only with regard to a few sections and once these are amended, omitted or substituted the legal or administrative issues will be resolved. There is no need to recast vast portions of the I-T Act which are not the subject matter of either litigation or any other controversy.

The procedure of churning out new laws on the ostensible ground of simplification is characteristic of the Central Government. Every few years, there is a proposal to amend or replace the Companies Act, 1956 with a simplified version.

It has never occurred to the lawmakers that companies are comfortable with the existing provisions and that the Act need not be replaced. All that is required is ironing out a few creases, but the process of repeatedly producing new drafts of the Companies Bill continues.

Coming back to the I-T Act, the process of simplification will be impossible if the present scheme of the Act is to continue. The Act now has more than 350 Sections. Chapter IV deals with different heads of income with numerous amendments made to individual sections. There are special provisions for calculating profits and gains for different kinds of business.

Chapter VI-A contains numerous deductions that are permissible while computing total income. Section 80HHC is itself a subject matter of enormous litigation it has undergone no less than 55 amendments in the last 23 years.

In addition, we have complex provisions dealing with FBT, assessment, block assessment, tax deduction at source, heavily underutilised provisions relating to prosecution and, at the end, eleven schedules.

In such an unwieldy background, it will be virtually impossible to have a simplified enactment. If such a miracle is indeed achieved, it is advisable for the Finance Ministry to first circulate the draft Bill (as in the case of the Companies Bill) to industry, chartered accountants and lawyers and ascertain their comments.

Simplification is possible only if there is the will and vision to alter the basic structure of the I-T Act. If the Finance Minister can usher in a flat rate of tax, eradicate multiple types and methods of taxation and eliminate numerous deductions, it may still be possible to simplify the law.

But even this will not require a new Act; drastically pruning the existing law will suffice. In the end, even if the new Act is ultimately enacted, it would be a meaningless exercise if the main evils of repeated amendments, tax evasion and corruption are not tackled. It is necessary to abandon the idea of framing a new I-T law; one does not demolish the existing building mainly because the plumbing is faulty.