The Arbind Modi-led panel, which was formed last year in November to suggest changes in the Income Tax law, has proposed 200% additional penalty on under-reporting of income.
The Arbind Modi-led panel, which was formed last year in November to suggest changes in the Income Tax law, may propose 200% additional penalty on under-reporting of income, ET Now reported citing sources. It is not clear yet if such a proposal was made for personal income tax or corporate tax.
After the overhaul of the indirect tax system to switch to the Goods and Services Tax (GST), the Narendra Modi government shifted the focus on making changes to the 50-year-old Income Tax Act. A task force was appointed under top taxman Arbind Modi to suggest required changes in the act to increase tax compliance in the country.
The panel is understood to be working on clearly defining the difference between misreporting and under-reporting; and proposing a 200% additional penalty on under-reporting and 50% additional penalty on misreporting, the ET Now report said. Formed in November last year, the task force was initially given six months to prepare its report. In May this year, it was given a three-month extension.
Income Tax overhaul has been a long-pending agenda. Arguably it was the UPA-II which had suggested several changes in the Income Tax under the name Income Tax Code. However, the code expired with the new government coming to power. Now, once the Arbind Modi-panel submits its proposals on overhaul of income taxes, it would be up to the government of the day whether to accept or reject the recommendations.
The Economic Survey had hinted at some changes required in the law. It said that the biggest litigator is the Income Tax Department, which loses most of its cases filed against taxpayers. Recently, the Narendra Modi government increased the threshold for litigations by the tax department with an aim to cut its number by 41%.
It was earlier reported that the government may not be in favour of implementing any sweeping changes in the law as Lok Sabha elections are due in 2019. The big overhaul aside, the government has implemented several small changes to increase the tax base.
A joint report by the World Bank and PwC said that due to a number of reforms including Income Computation and Disclosure Standards (ICDS) have helped in reducing the time required to comply with the corporate income tax.