With the Goods and Services Tax (GST) in place, the government has now turned its attention towards improving India’s direct tax regime by constituting a task force to review the country’s 56-year old Income Tax law and suggest a new law to replace it.
On Wednesday, the Finance Ministry formed a task force led by Central Board of Direct Taxes Member Arbind Modi to review the Income Tax Act, 1961 and draft a new direct tax law in consonance with economic needs of the country.
Terms of reference
“The terms of reference of the task force is to draft an appropriate direct tax legislation keeping in view the direct tax system prevalent in various countries, international best practices, the economic needs of the country and any other matter connected thereto,” the Ministry said in a statement.
Prime Minister Narendra Modi had sought a redrafting of the archaic Income Tax law to make it simpler and raise India’s low direct tax base, at a meeting with tax administrators this September.
The task force had been given six months to submit its report to the Centre. Hence, a decision on the tax law overhaul is unlikely in the 2018-19 Union Budget.
Chief Economic Advisor Arvind Subramanian will be a permanent special invitee in the task force that also includes academics, private sector tax experts and a retired Indian Revenue Service officer.
Incidentally, Mr. Arbind Modi was also instrumental in drafting the direct taxes code which was introduced in 2009 by the then Finance Minister Pranab Mukherjee. The UPA Government subsequently diluted the provisions proposed in the code.
The NDA government had put the code in cold storage after assuming office in May 2014.
‘Future-ready’
Rajiv Memani, chairman and regional managing partner, EY, who is one of the members of the tax force, said the government’s steadfast focus on undertaking ‘bold yet much needed reforms will enhance India’s competitiveness and make the country future-ready.’
