The task force will draft a new direct tax law in consonance with economic needs of the country, the finance ministry said in a statement
The government on Wednesday constituted a task force for a review of the existing direct tax law in India.
The task force will draft a new direct tax law in consonance with economic needs of the country, the finance ministry said in a statement.
The six-member task force will have Arbind Modi, Central Board of Direct taxes (CBDT) member (legislation) as the convener and other members, including Girish Ahuja (chartered accountant), Rajiv Memani (chairman and regional managing partner, EY) and Mansi Kedia (consultant, Indian Council for Research on International Economic Relations (ICRIER).
Chief economic adviser Arvind Subramanian will be a permanent special invitee in the task force.
Prime Minister Narendra Modi, during the annual conference of tax officers in September, had observed that the Income-tax Act, 1961 was drafted over 50 years ago and it needs to be redrafted. "Accordingly, in order to review the Act and to draft a new direct tax law in consonance with economic needs of the country, the government has constituted a task force," a finance ministry statement said.
The task force will submit its report to the government within six months.
The panel has been tasked to draft a direct tax legislation keeping in view the tax system prevalent in various countries, the international best practices and economic needs of the country.
In 2009, the UPA government had come out with Direct Taxes Code to simplify the tax legislation for individual taxpayers as well as corporates. The Direct Taxes Code (DTC) Bill, 2010, which was introduced in Parliament in 2010, lapsed with the lapsed with the dissolution of the 15th Lok Sabha.
The government had introduced goods and services tax (GST) from July this year.
Experts have welcomed the development of a review of the existing IT Act.
Rajesh H Gandhi, partner, Deloitte India said," The new tax code is expected to introduce some fundamental changes to the tax law considering the government's strong intent of improving the ease of doing business in India. The government should use the opportunity to simplify the tax rules which have become quite complicated over the years due to numerous changes and rulings of the courts. "
The new code will hopefully be easier for taxpayers to understand and implement which will help to further improve the country's image as an investor-friendly jurisdiction.
While the government has taken steps over the years by reducing tax incentives and improving administrative provisions which are often an area of litigation, more can be achieved through the new code by introducing provisions which will reduce tax litigation and simply the administrative provisions".
Frank D'Souza, partner corporate and international tax, PwC said, "With the experience of DTC not too long ago, it would be interesting to see how this attempt would eventually unfold. Clearly, the need to have the law more relevant to current economic and business environment is very much there, it would all depend on how the process to revolve and finalise the law, is undertaken."
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