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Bridging The Gap
After demonetisation and GST, Modi govt sets sight on new Direct Tax law.
  Wednesday 22 November, 2017
After demonetisation and GST, Modi govt sets sight on new Direct Tax law.

After overhauling indirect taxes, the Modi government has set sight on country's Direct Tax law. A task force for redrafting the Indian Income Tax Act, 1961, has been set up by the government to bring it in tune with the current economic needs and realities.

Prime Minister Narendra Modi, during the annual conference of tax officers in September, had observed that the Income-tax Act, 1961 was drafted more than 50 years ago and it needs to be redrafted.

The task force, which will submit its report to the government within six months, would draft direct tax laws in line with tax laws prevalent in other countries, incorporating international best practices, and keeping in mind the economic needs of the country.

The move, which is aimed to make direct taxes - income and corporate - simple, comes ahead of BJP-led government's last full Budget.

It comes within months of the launch of Goods and Services Tax (GST) that overhauled the indirect tax regime by unifying more than a dozen central and state levies, including excise duty, service tax and VAT.

Members of the Task Force

Top taxman Arbind Modi has been asked to do the task again to meet the contemporary economic needs of the country.

Modi, Member, Central Board of Direct Taxes (CBDT), will steer a six-member panel on the issue, an official press statement said. Arvind Subramanian, chief economic advisor will be a permanent special invitee on the panel.

Other members of the task force include Girish Ahuja (chartered accountant), Rajiv Memani (Chairman and Regional Managing Partner of EY), Mukesh Patel (Practicing Tax Advocate), Mansi Kedia (Consultant, ICRIER) and G C Srivastava (retired IRS and Advocate).

Previous Attempts to overhaul Direct Taxes

Former finance minister P Chidambaram had in 2009 proposed the original direct taxes code to replace the cumbersome IT law with a clean new law and to embody the principle of keeping taxes low and removing exemptions.

Modi had assisted the former finance minister in preparing the code. However, the bill, that underwent many changes subsequently was not passed by Parliament.

The Direct Taxes Code (DTC) Bill, 2010, which was introduced in Parliament in 2010, lapsed with the dissolution of the 15th Lok Sabha.

The Bill had proposed annual I-T exemption limit at Rs 2 lakh, and levying 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-10 lakh and 30 per cent above Rs 10 lakh. For domestic companies, it suggested tax rate of 30 per cent of business income.

The NDA government, since coming to power in 2014, has already implemented general anti-avoidance rules GAAR. In 2016, Finance Minister Arun Jaitley also promised to lower corporate tax rate to 25 per cent in 5 years.

Currently, income up to Rs 2.5 lakh per annum is exempt from tax for individuals.

Source: http://zeenews.india.com/personal-finance/after-demonetisation-and-gst-modi-govt-sets-sight-on-new-direct-tax-law-2059369.html

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