A security guard counts a stack of Indian one hundred rupee banknotes at an India Post branch. (Photographer: Anindito Mukherjee/Bloomberg)

Panel To Overhaul, Simplify Direct Tax Laws To Submit Report By Feb. 28

The Finance Ministry today said that the task force to draft a new direct tax law to replace the existing Income Tax Act will submit its report by Feb. 28.

The ministry had in November 2017 set up a six-member task force to rewrite the Income Tax laws. However, the convener of the panel, Arbind Modi, retired on Sept. 30, which left the report of the task force in limbo.

The ministry today named Central Board Of Direct Taxes member Akhilesh Ranjan as the head of the task force.

"In partial modification of the earlier order, the government has appointed Akhilesh Ranjan, Member (Legislation), CBDT as Convenor of the Task Force,” the ministry said in a statement. “Other members of the Task Force remain unchanged. The Task Force shall submit its report to the Government by Feb. 28,2019.”

The NDA government will be presenting its interim budget for 2018-19 before Parliament on Feb. 1. The full 2018-19 Budget would be presented after the general elections due sometime later next year.

Prime Minister Narendra Modi, during the annual conference of tax officers in September last year, had observed that the Income-tax Act, 1961, was drafted more than 50 years ago and it needed to be redrafted.

Also read: 75 Lakh New Tax Filers Added To Income Tax Net This Fiscal Year: Official

Other members of the task force include:

  • Girish Ahuja- Chartered Accountant
  • Rajiv Memani- Chairman and Regional Managing Partner of EY
  • Mukesh Patel- Practicing Tax Advocate
  • Mansi Kedia-Consultant, Indian Council for Research On International Economic Relations
  • GC Srivastava- retired IRS and Advocate

The task force was assigned to draft direct tax laws in line with the norms prevalent in other countries, incorporating international best practices and keeping in mind the economic needs of the country. The panel was initially supposed to submit its report to the government, within 6 months, by May 22.

The finance ministry on May 22 extended the term of the task force by another three months till Aug. 22. The committee didn't submit the report within that deadline as well.

Former finance minister P Chidambaram had in 2009 proposed the original direct tax code to replace the cumbersome IT law with a clean new law and to embody the principle of keeping taxes low and removing exemptions.

The NDA government, since coming to power in 2014, has already implemented the general anti-avoidance rules (GAAR). In 2016, Finance Minister Arun Jaitley also promised to lower corporate tax rate to 25 per cent in 5 years.

Currently, income up to Rs 2.5 lakh per annum is exempt from tax for individuals.