A new direct tax code is on the brink of being introduced and the government calls it an amendment which will not only reduce the tax but will also reduce the burden of compliance on the assesses.
A new direct tax code is on the brink of being introduced and the government calls it an amendment which will not only reduce the tax but will also reduce the burden of compliance on the assesses. The task force, which was constituted by the finance ministry in Nov 2017, is at its last stage to submit the final report by 16 August 2019. The new direct tax code is aimed to redefine fundamental concepts such as income and the scope of taxation to make it more progressive for the assesses falling in the middle-income tax slabs of 5 per cent and 20 per cent.
Increase in the standard deduction for the family pension to Rs 50,000, clarification on tax exemption for a disability pension for armed forces and savings-linked tax incentives are the key areas where amendments are likely.
In her maiden budget presented by Finance Minister Nirmala Sitharaman, corporate tax on companies less than an annual turnover of Rs 400 crore was reduced to 25 per cent, instead of 30 per cent. Earlier, 25 per cent corporate tax was imposed on companies with an annual turnover not exceeding Rs 250 crore.
In an official statement on Wednesday, the Central Board of Direct Taxes (CBDT) has underlined that the new members of the task force needed some more time to finalise the report, due to which the government has allowed the extension till Aug 16.
Nirmala Sitharaman has consistently been commenting that the work on a direct tax code has been completed and that the government will implement it as soon as it gets the report by the task force. However, the task force was supposed to submit its report by July 31, failing which, the government has given a further extension of around two weeks. Akhilesh Ranjan, Member of CBDT was appointed as the convenor of the task force aimed to review the Income Tax Act 1961 and to draft a new direct tax code to make it more appropriate to comply with the present needs of the economy.