1. Income Tax Act: Narendra Modi government has this big agenda on mind

Income Tax Act: Narendra Modi government has this big agenda on mind

Four months after the government implemented the new indirect tax regime, it announced on Wednesday that it has appointed a task force to draft a new direct tax law after reviewing the over 50-year old Income Tax Act, 1961.

By: | New Delhi | Updated: November 23, 2017 7:48 AM
15th Finance Commission, 14th Commission, central board of direct taxes, draft direct tax code, new indirect tax regime, Hindu undivided family The task force will be also be represented by chief economic adviser Arvind Subramanian as permanent special invitee to the task force.

Four months after the government implemented the new indirect tax regime, it announced on Wednesday that it has appointed a task force to draft a new direct tax law after reviewing the over 50-year old Income Tax Act, 1961. The proposed direct tax code is expected to simplify and consolidate existing laws into a single legislation. The task force has been given six months to carry out the exercise. Arbind Modi, member of central board of direct taxes (CBDT), has been named convener of the seven-member group. The terms of reference for the task force include studying the direct tax system prevalent in various countries along with the international best practices. Additionally, the new direct tax code would be based on the economic needs of the country and other connected matters, the government said in a statement.

A draft direct tax code (DTC) was put in the public domain in 2009, but after multiple iterations of public consultation including suggestions from standing committee on finance, the draft was not passed by Parliament. However, a revised version of DTC was released in 2014, which has not been taken further by the current government. The revised DTC had proposed an exemption of up to Rs 3 lakh on personal income while suggesting that the peak rate of 30% tax should apply to those with income above Rs 25 lakh. For income tax on corporates, the draft code had proposed withdrawal of several exemptions and cutting the tax rate to 25% in phases, a process which is anyway on. Further, a dividend tax was proposed on the income earned by resident shareholders in excess of Rs 1 crore. It also proposed a tax rate of 35% for individuals and Hindu undivided family (HUFs) where the total income exceeds Rs 10 crore.

For corporates, the DTC 2013 proposes to introduce General Anti Avoidance Rules (GAAR), taxation of Controlled Foreign Companies (CFC), Place of Effective Management (POEM) rule and also contained expanded source rules for taxation of royalty, fees for technical services (FTS) and interest. Since then, however, many of these proposals have been introduced in the existing tax law including GAAR, taxation of indirect transfer of assets, widening the source rule for taxation of royalty and fees for technical services. “While the stated objective of this proposal is laudable, the present Income Tax Law in the country already contains most of the international best practices such as GAAR, transfer pricing / CBCR, BEPS and so on. It would be helpful if the new tax law emphasises more reasonable and fair administration of the tax laws to address the concerns of uncertainties and needless tax litigations,” Sanjay Sanghvi, partner, Khaitan & Co, said.

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The task force will be also be represented by chief economic adviser Arvind Subramanian as permanent special invitee to the task force. Other members include Girish Ahuja, practicing chartered accountant and non-official director of State Bank of India; Rajiv Memani, chairman and regional managing partner of E&Y; Mukesh Patel, practicing tax advocate; Mansi Kedia, consultant at ICRIER; and GC Srivastava, a retired Indian Revenue Services (IRS) official. “Most provisions of the current income tax law are now settled and clear. Instead of changing the entire law, the government should consider modifying the existing law so that the disputable provisions and litigations could be minimised. DTC advocated removal of profit-linked deductions, which have already been announced under the income tax Act. So, it would not be a wise decision to unsettle the settled law, especially in the present environment where entities are endeavouring their best to implement India’s biggest tax reform, GST, in its true spirit.” Naveen Wadhwa, DGM, Taxmann.com, said.

  1. S
    Sanjeevkumar93493@gmail.com
    Nov 23, 2017 at 7:22 pm
    Very good information
    Reply
    1. S
      Sanjeeb Kumar Jena
      Nov 23, 2017 at 4:29 pm
      Let all the persons pay tax whether it may be one rupees. No exemption for NE people. A flat rate is the need of the hour. If banking transaction tax 0.1 percent levied n cash transaction above 5000 not to be allowed then people ll be happy n govt also have a wide tax net.
      Reply
      1. Thiruveedhi Ramanarayanan
        Nov 23, 2017 at 1:52 pm
        Really a welcomable idea, but soon it should be implemented.
        Reply
        1. Harvinder Maini
          Nov 23, 2017 at 11:00 am
          through this mad out of parliament, otherwise he will destroy India totally.
          Reply
          1. U
            Utpal baberjee
            Nov 23, 2017 at 9:52 am
            What about the EXEMPTIONS of taxes on SENIOR RETIRED CITIZENS ?
            Reply
            1. G
              Gautam
              Nov 24, 2017 at 9:12 am
              Why should a well earning oldie be exempted to tax ... Most of the cases where olfies are earning good have least liabilities and they are only increasing their wealth for their sons who are already eraning well... Isnt this unfair to a 22 year kid who is sole earning member of family and with liability of whole family and ailing mother and father (if not dead alreafy) paying heavy taxes ... Shamefull of well earning oldies to ask for tax exemption
              Reply
            2. Sivakumar Kasiviswanathan
              Nov 23, 2017 at 9:34 am
              Pls don't scratch middle class people in the name of revolution, political mileage, improving economy. GST killed, demonization ruined and now direct tax is going to erode us. I don't belong to any political party, rather true Indian. If it is a good intention, they could do in pocket but showing all good things in real and practical for command man and quote it as a role model. Without this all gimmicks are just waste. Inna way, our country will not improve. Why so much of disparity, inequality between rich and poor? No action, all just utter waste. Anyways, I can just share my feelings, nothing can be done. These guys are our representative but they act as God and ruin entire country. God pls save us.
              Reply
              1. B
                BD
                Nov 23, 2017 at 2:49 pm
                Boss, inequality comes from King culture followed by 60 year of garibi Hatao govt ruined this country. They all give free bees to low class get the vote and rest is Corruption. Middle Class completed ed nor their vote has any meaning before, Now all voted to Modi. Now you expect Modi will change all in a magic move.. How tht is possible.? Again Demonetization why middle class has an issue, it effected ONLY people those have ill collected money. To me some action is bettter than no. If we continue to run like before , Now we are 30 year behind china.. if not action taken it will be 60 behind very soon all the product will be made in CHINA.
                Reply
              2. G
                Ganesh
                Nov 23, 2017 at 7:08 am
                Problem of problems with this kind of commities is that nothing changes afterwards. Its 70yrs of experience and waste of time exercise. Ultimate aim should be how to bring those 75 under tax bracket who aren't paying taxes. 10 and 20 income tax on farmers declaring above 50L and 1crore respectively. As long as same people are here and there nothing is bound to change. It requires fresh minds and brain to change the system. Also there is lack of will by political leadership
                Reply
                1. Anand Ch
                  Nov 23, 2017 at 6:51 am
                  Since now all information is available to IT through Aadhar and PAN links, filing returns must be scrapped for zero tax. IT dept must send notices only to those who have to pay taxes.and not to all.
                  Reply
                  1. V
                    Vick
                    Nov 23, 2017 at 6:35 am
                    Modi and Jaitley is good at simplifying tax and process with HEFTY and UNBEARABLE level of tax structure. Hope he does not repeat GST stupidity again. JAI HIND
                    Reply
                    1. J
                      Jagadish
                      Nov 23, 2017 at 6:32 am
                      Just abolish income tax!
                      Reply
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