DNA Money Edit: Now, direct tax reforms on govt agenda

Close on the heels of rolling out goods and services tax (GST), the government is now gearing up for another big tax reform -- review of direct taxes. The move, which is aimed to make direct taxes — income and corporate — simple, comes ahead of BJP-led government’s last full Budget. Kicking off the process, the government has set up a six-member task force to draft a new direct tax regime.

The panel will redraft the archaic income-tax rules, which have been in force since 1961, to suit the requirements of a fast-growing economy. The new direct tax legislation will be introduced keeping in view the tax system prevalent in various countries, the international best practices and economic needs of the country. The panel will submit its report within six months.

This gives the government an opportunity to widen the tax net while reducing the tax structure. In 2016, finance minister Arun Jaitley had promised to lower corporate tax rate to 25% in five years.

In 2009, the UPA government had made an effort to simplify the tax legislation for individual taxpayers as well as corporates, and introduced Direct Taxes Code (DTC). However, the DTC Bill, 2010, which was introduced in Parliament in 2010, lapsed with the dissolution of the 15th Lok Sabha.