Direct Tax Law: After Demonetisation, Government Ready for Another Bold Move, Sets Panel to Review Direct Taxes

The review comes after Prime Minister Narendra Modi, during the annual conference of tax officers in September observed that the Income-tax Act, 1961 was drafted more than 50 years ago and it needs to be redrafted.

Updated: November 23, 2017 4:51 PM IST

By India.com Business Desk

Income Tax
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New Delhi, November 23: With an aim to review the Income Tax Act, 1961 and to redraft the 50-year old income tax law, the government today set up a six-member task force. The task force is believed to redraft the old law with the economic needs of the country. After demonetisation, the government is eyeing to restructure the country’s Direct Tax law which will impact your tax rates and exemptions in the coming years. The move is aimed to make direct taxes – income and corporate – simple. The review comes after Prime Minister Narendra Modi, during the annual conference of tax officers in September observed that the Income-tax Act, 1961 was drafted more than 50 years ago and it needs to be redrafted.

Highlights

  • Government has announced a review of direct taxes which will impact tax rates and exemptions
  • The task force will be headed by Arbind Modi
  • The report has to be sumbitted within six months

The Task Force shall set its own procedures for regulating its work and shall submit its report to the Government within six months. The decision of forming the new task force comes within months of the launch of Goods and Services Tax (GST) on July 1, 2017. The GST overhauled the indirect tax regime by unifying more than a dozen central and state levies, including excise duty, service tax and VAT.

The Terms of Reference of the Task Force is to draft an appropriate Direct Tax Legislation keeping in view:

(i) The direct tax system prevalent in various countries,

(ii) The international best practices.

(iii) The economic needs of the country and

(iv)  Any other matter connected thereto.

Convener of Task Force would be Arbind Modi, Member (Legislation), CBDT. Members include Girish Ahuja, practising CA & non-official Director, SBI; Rajiv Memani, Chairman & Regional Managing Partner of E&Y;  Mukesh Patel, Practicing Tax Advocate, Ahmedabad. The other Members of the Task Force include Mansi Kedia, Consultant, ICRIER, New Delhi and G.C. Srivastava, Retd. IRS (1971 Batch) and Advocate. Dr Arvind Subramanian, Chief Economic Adviser (CEA) will be a permanent Special Invitee in the Task Force.

The newly constituted task force will submit its report to the government within six months. It would draft direct tax laws in line with tax laws prevalent in other countries, incorporating international best practices, and keeping in mind the economic needs of the country.

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