The Finance Ministry had in November last year set up a six-member task force to rewrite the over 50-year-old income tax laws.
Ahead of the interim Budget and general elections early next year, finance minister Arun Jaitley on Monday held a closed-door meeting with industry captains to discuss the current economic environment and the steps being taken by the government to address emerging issues. The meeting was organised by industry body CII.
Later in the day, the finance ministry said the task force to draft a new direct tax law to replace the existing Income Tax Act will submit its report by February 28. The ministry had in November last year set up a six-member task force to rewrite the over 50-year-old I-T laws. However, the panel’s convener, Arbind Modi, retired on September 30, which left the report in limbo. The ministry on Monday named Central Board Of Direct taxes member Akhilesh Ranjan as the new head.
While the upcoming interim Budget will primarily seek a vote on account (Parliament nod for expenditure to be incurred in the initial months of next fiscal while a full Budget will be presented by the next government), Jaitley will spell out a broad agenda of the Narendra Modi government if the BJP-led alliance returns to power in May.
However, the government won’t announce any new policy measures in the interim budget.
In Budget FY16, the government had unveiled a plan to reduce the corporate tax rate from 30% to 25% in four years to make India’s tax rates globally competitive. However, its implementation has been partial due to concerns on revenue front. It has cut the corporate tax rate to 25% for those companies which reported a total turnover of up to Rs 250 crore, largely benefiting MSMEs. Corporate India has been vocal in demanding the promised tax cuts be implemented in full.
In October, Jaitley had told a gathering of industry captains that India needs a strong and decisive leadership at the Centre to sustain high economic growth, eliminate poverty and transform the country into a developed nation. A weak leadership at the Centre could not have handled the IL&FS crisis the way the present government did, he said.
Despite external headwinds, the government has been confident about the achieving budget targets, especially fiscal deficit and capex targets in 2018-19.
Economic affairs secretary Subhash Chandra Garg told FE on Friday that the government would meet this year’s fiscal deficit target of 3.3% of the gross domestic product, with a “small cut in expenditure.”