Panel, led by CBDT Member Arbind Modi, given 6 months to review IT Act 1961
Government Constitutes Task Force To Draft New Direct Tax Law
With the Goods and Services Tax (GST) in an area, the authorities have now turned its interest closer to enhancing India’s direct tax regime by means of constituting a challenge pressure to study the united states of America’s fifty-six-year-old Income Tax law and endorse a new law to replace it.
On Wednesday, the Finance Ministry shaped a challenge pressure led through Central Board of Direct Taxes Member Arbind Modi to check the Income Tax Act, 1961 and draft a new direct tax law in consonance with monetary wishes of u. S . A ..
Terms of reference
“The phrases of reference of the undertaking pressure is to draft the precise direct tax regulation preserving in view the direct tax system conventional in diverse international locations, worldwide first-class practices, the monetary wishes of u. S . And any other matter connected thereto,” the Ministry said in an announcement.
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Prime Minister Narendra Modi had sought a redrafting of the archaic Income Tax regulation to make it less complicated and raise India’s low direct tax base, at a meeting with tax administrators this September.
The task pressure had been given six months to put up its file to the Centre. Hence, a selection on the tax regulation overhaul is not going in the 2018-19 Union Budget.
Chief Economic Advisor Arvind Subramanian will be a permanentthat still includes academics, private zone tax professionals and a retired Indian Revenue Service officer.
Incidentally, Mr. Arbind Modi becomes additionally instrumental in drafting the direct taxes code which became added in 2009 by the then Finance Minister Pranab Mukherjee. The UPA Government subsequently diluted the provisions proposed inside the code.
The NDA government had put the code in bloodless storage after assuming workplace in May 2014.
Rajiv Memani, chairman and nearby coping with the associate, EY, who’s one of the participants of the tax pressure, stated the authorities’ steadfast attention on challenge ‘formidable yet lots needed reforms will decorate India’s competitiveness and make us of a destiny-equipped.’
Income Tax Act set for overhaul
New Delhi: After the indirect tax regime become converted by way of the implementation of the goods and services tax (GST), the 56-yr-old Income Tax Act is now set for an overhaul.
On Wednesday, the finance ministry sets up a six-member mission pressure to draft a new direct tax law with a view to better serve u. S .’s monetary needs via widening the tax base, improving compliance and simplicity of doing commercial enterprise.
Prime Minister Narendra Modi observed at a tax officers’ convention in early September that the Income Tax Act of 1961 changed into over half-a-century vintage and had to be re-drafted.
Arbind Modi, member, Central Board of Direct Taxes, become named convener of the six-member panel that has been tasked to draft a new regulation. Modi becomes additionally a key contributor to the direct taxes code proposed via the preceding United Progressive Alliance authorities.
Almost all of the thoughts within the proposed direct taxes code—which include General Anti-Avoidance Rules meant to crack down on complicated company preparations geared toward tax evasion and provisions to tax the offshore transfer of assets placed in India—have already been adopted within the current Income Tax Act. Also, a key notion of the erstwhile direct taxes code of phasing out corporate tax exemptions and lowering of the tax charge to 25% from 30% is being carried out in tiers.
For people, the direct taxes code proposed that income inside the Rs2-five lakh bracket be taxed at 10%. The modern tax slab is greater liberal than that—profits as much as Rs2.Five lakh per annum is exempt from tax for people (Rs3 lakh inside the case of senior residents) and profits of as much as Rs5 lakh is taxed at five%.
“The committee has now not been given any particular path to adopt a new law. It is open to the committee to provide you with a draft by means of analyzing present provisions and models in different nations,” someone briefed about the development said, asking for anonymity.
Globally, governments were on a pressure to combat what it appeared as aggressive tax making plans by groups the usage of a complicated web of subsidiaries across jurisdictions to preserve tax outgo artificially to a minimal.
The other individuals of the panel are Girish Ahuja, chartered accountant; Rajiv Memani, chairman and local dealing with the accomplice of EY; Mukesh Patel, propose; Mansi Kedia, consultant, ICRIER; and G.C. Srivastava, propose.
Chief financial adviser, Arvind Subramanian might be a permanent special invitee in the project force, as a way to submit its file in six months.
Experts welcomed the move, however, remained worried about any primary disruption in direct tax legal guidelines after the unsettling initial effect of the GST roll out. GST dismantled inter-state boundaries to change.
“In light of the disruption brought about within the past as a consequence of structural reforms, it is acceptable to have a solid tax regime till as a minimum 2019,” said Amit Maheshwari, partner, Ashok Maheshwary and Associates LLP. “The circulate to overtake direct tax laws to improve ease of doing commercial enterprise, widening the tax base and to offer stringent penalties for evasion is welcome,” he introduced.
The government has formed a mission pressure to draft brand new direct tax rules. The project force will submit its report in six months.
The committee will look at direct tax device prevalent in various nations, global fine practices, economic needs of the country and any other matter related thereto as a time period of reference.
The members of the panel are Arbind Modi, Girish Ahuja, Rajiv Memani, Mukesh Patel, Mansi Kedia and GC Srivastava. Chief Economic Adviser Arvind Subramanian has been given permanent unique invitee fame within the tax assignment force.
The committee will study direct tax, global pleasant practices, financial wishes of the USA and another rely upon related thereto as a term of reference.
GC Srivastava, Member of Direct Tax Panel, stated that there were lots of tendencies at the worldwide degree with regard to pass-border taxation and the home law has to keep tempo with those developments.
He further said that the brand new committee may even undergo tips proposed by means of the sooner direct tax code bill underneath the UPA authorities.
The Direct Taxes Code (DTC) Bill, 2010, which changed into delivered in Parliament in 2010, lapsed with the dissolution of the 15th Lok Sabha.
The Bill had proposed annual profits tax exemption limit at Rs 2 lakh, and levying 10 percentage tax on income among Rs 2 lakh and Rs five lakh, 20 percentage on Rs 5-10 lakh and 30 percentage above Rs 10 lakh. For home groups, it advised a tax fee of 30 percent of enterprise earnings.
The NDA government, because coming to power in 2014, has already implemented preferred anti-avoidance regulations (GAAR). In 2016, Finance Minister Arun Jaitley also promised to decrease corporate tax fee to 25 percentage in 5 years.
Currently, income as much as Rs 2.5 lakh in line with annum is exempt from tax for individuals.
Eight years after he first helped draft a new direct tax code for India, pinnacle revenue branch bureaucrat Arbind Modi has been handed the venture once more.
On Tuesday, the ministry of finance said in a media declaration that India’s profits tax regulation is over 50 years antique and wishes to redraft. Hence a venture force of 7 individuals has been constituted to draft brand new direct tax rules.
Arbind Modi, member (Legislation), CBDT
Girish Ahuja chartered accountant
Rajiv Memani, chairman, EY
Mukesh Patel, propose
Mansi Kedia, consultant, ICRIER
GC Srivastava retired IRS member and advocate
The media statement says Chief Economic Adviser Arvind Subramanian could be an everlasting special invitee inside the undertaking pressure.
The committee’s terms of reference are to draft a new law keeping in thoughts the prevalent taxation gadget in other international locations, global quality practices and financial needs of u. S . A ..
“Rewriting a code need to have the item of simplifying and lowering disputes,” GC Srivastava informed BloombergQuint. Having just acquired formal intimation from the government he preferred now not to get into greater detail adding that the committee had but to fulfill and determine the parameters of dialogue.
The domestic regulation has to hold tempo with the adjustments taking location on the worldwide stage.
GC Srivastava, Retired IRS Member and Advocate
The ministry announcement said the undertaking force will be allowed to set its personal techniques for regulating its work and shall submit its report to the government within six months.
In an emailed comment Sanjay Sanghvi, the associate at law firm Khaitan & Co described the constitution of this task pressure as a thrilling improvement.
There become a Direct Tax Code, 2010 which turned into now not enacted (barring a few provisions). While the stated goal of this thought is laudable, the prevailing Income Tax Law within the united states already includes the maximum of the international exceptional practices which include GAAR, transfer pricing / CBCR, BEPS and so on. It would be helpful if the brand new tax regulation emphasizes extra affordable and honest management of the tax laws to cope with the concerns of uncertainties and needless tax litigations.