Budget 2019-20: The original Direct Taxes Code (DTC) had proposed personal tax rates and income slabs which would lead to higher disposable income for every class of taxpayer.
Union Budget of India 2019: The wait for a complete revamp of the Indian taxation system is going to prolong further. The Task Force set by the government to submit the report on new direct law has again been given an extension till July 31, 2019. Constituted in November 2017, it was initially extended till February 2019 and later on, it was extended again till May 31. It remains to be seen what the Union Budget of India 2019 has in store for the taxpayers as far as the new direct tax law is concerned. “While it is likely that the budget speech on July 5 by the Finance Minister would get a mention of ushering in DTC, we are still far away from its actual on-ground implementation,” says Sandeep Jhunjhunwala, Director Nangia Advisors (Andersen Global).
Back in September 2017, Prime Minister Narendra Modi had observed that the Income-tax Act, 1961 was drafted more than 50 years ago and it needs to be re-drafted. Therefore, in order to cary out a complete review of the Act and to also draft a new Direct Tax Law in line with economic needs of the country, the government has constituted a Task Force which was required to submit the report in six months. The task force seeks to draft new direct tax legislation primarily looking into the direct tax laws prevalent in other countries, international best practices and the economic needs specific to our country.
Earlier, previous governments had also taken steps to revamp the tax structure in the country. The original Direct Taxes Code (DTC) had proposed personal tax rates and income slabs which would lead to higher disposable income for every class of taxpayer i.e. the tax burden would have been lower for each income group including senior citizens. There were proposals to do away with the innumerable exemptions available in the current structure and had specific proposals to deal with the provident fund, insurance, housing amongst other personal investments.
So, when the taxpayers of the country expect the new tax laws to be there in place? “It is important to keep in mind that the draft issued by the task force would undergo an extensive public consultation and feedback process, given that the new code would revamp the entire direct tax system in India, including the six-decade-old Income Tax Act. This would be followed by the parliamentary procedures for approval of the new legislation. Keeping these broad contours in mind, the actual implementation of the new legislation is surely few more years away,” says Jhunjhunwala.