The Modi led government in its last term constituted a Task Force to rewrite the Income Tax Law that would reduce compliance and tax burden and make tax governance effective. The New Direct Tax Code which was presented by the Task Force led by CBDT member Akhilesh Ranjan, member of Central Board of Direct Taxes on the 19th of August is all set to replace the Income Tax Act 1961. The Task Force was established in November 2017 under the then Finance Minister Mr. Arun Jaitely. The date of presentment of the report has been given many deadline extensions since then.
The Direct Tax Code is proposed with the objective to replace Income Tax Act 1961 as the archaical Act has now outlived its utility and introduce an Act that would incorporate international features, reduce the cost of compliance, and bring simplification.
Whether the Direct Tax Code will reduce the compliance burden and increase the taxpayers base is still a question. However, sources have claimed that the panel mooted 25% tax rate for all firms and changes in income tax slab for the individuals. The proposed corporate tax rate reduction will apply to both large, local and as well as foreign companies without a subsidiary and are taxed at 40%. The government might also do away with the Dividend Distribution Tax and minimum alternate tax. People are expecting that the Direct Tax Code will be a progressive tax system.
Mr. Sanjay Kumar Direct Tax Expert, Deloitte India said that,
"There will be a number of steps that will be followed before it actually becomes an Act. The first document that we are likely to see in the public domain will be a public policy document, thereafter there will be public consultations there would also be parliamentary proceedings and then the law will come into effect. So we should be looking at close to one year of time."
The Task Force for Direct Tax Code has submitted the report to the Finance Minister. However, the report is not in the public domain as of now. The public document will be unveiled once the Finance Minister gives the go-ahead to the Task Force’s report. "Once the direct tax code is unveiled every taxpayer will be able to proudly say that I would want to pay my taxes and the tax professionals would proudly say that we have a tax system in the administration that put us in the league of nations," said Mr Mukesh Patel member of Direct Tax Force.
Tags :Income Tax