New Delhi: After reforming indirect taxes by introducing GST, the Modi government is now looking at reforming direct taxes. The Centre on Wednesday constituted a task force to review over the 55 years old Income-tax Act, 1961 and to draft a new direct tax law in consonance with economic needs of the country. The panel recommendation is likely to have far reaching implications and is likely to change the way one currently pays personal income tax and may even ask to rationalise tax rates for both individuals and corporates.
Currently complex tax laws are resulting in huge legal disputes and leading to allegation of tax terrorism by corporates. The task force is expected to simplify direct tax laws in the country. The task force is being set after Prime minister Narendra Modi during the Rajaswa Gyan Sangam in September had said that the Income-tax Act, 1961 (the Act) was drafted more than 50 years ago and it needs to be re-drafted.
The six-member task force will have Arbind Modi, CBDT member (Legislation) as the convener and other members, including Girish Ahuja (chartered accountant), Rajiv Memani (chairman and regional managing partner of EY) and Mansi Kedia (consultant, ICRIER). CEA Arvind Subramanian will be a permanent special invitee in the Task Force. The task force will submit its report to the government within six months.The finance ministry said that the task force will draft the new direct tax legislation keeping in view direct tax system prevalent in various countries,international best practices and economic needs of the people.
Interestingly, the NDA government has set up a task force to review direct tax laws when it has junked “Direct Taxes Code” which was proposed by UPA government in 2009 to replace the IT Act to simplify the tax legislation for individual taxpayers as well as corporates. The UPA government had framed the “Direct Taxes Code” after a public discussion and a Direct Taxes Code (DTC) Bill, 2010 was introduced in Parliament in 2010. However, the bill lapsed with the dissolution of the 15th Lok Sabha.
