Panel Redrafting Income Tax Law Unlikely To Cut Rates
The task force set up to redraft the income tax law will focus on removing the ambiguities, rather than suggesting dramatic policy changes or tweaking of tax rates, panel's convenor Akhilesh Ranjan said on Tuesday.
Ranjan said the six-member task force, formed to redraft the over 50-year-old income tax law, will meet shortly to draft a new legislation which will be more comprehensible.
"Tax rate is prima-facie not the main focus area of this task force...(task force will focus on) simplification which can remove the ambiguities," Ranjan told reporters in New Delhi.
He said there are clauses, provisos and explanations which have been added to the Income Tax Act, 1961 over time which need to be streamlined in simple language.
"We have been adding provisions after provisions, explanations after explanations, they have become inconsistent, ambiguous. So let us clarify the real intent of the law. In that process there may be some new policy initiatives while trying to make things clear,” he said.
"The focus is not on coming out with a new tax policy but focus is on making the law more comprehensible," said Ranjan, who is member (legislation) in the Central Board of Direct Taxes.
The task force was set up by the finance ministry in November 2018.
On Nov. 26, Ranjan was appointed as the convenor and has been mandated to submit the report by Feb. 28.
Asked if the panel would submit any report before the interim budget on Feb.1, Ranjan said it was unlikely. The NDA government would be presenting its interim Budget for 2018-19 on Feb. 1.
The full 2018-19 Budget would be presented after the general elections due sometime in the mid of 2019. In September last year, Prime Minister Narendra Modi, had said in an event that the Income Tax Act, 1961 needed to be redrafted.
Other members of the task force include chartered accountant Girish Ahuja, EY Chairman and Regional Managing Partner Rajiv Memani, tax advocate Mukesh Patel, ICRIER Consultant Mansi Kedia, and retired IRS and advocate GC Srivastava.
"I am having a meeting (of task force) very shortly. I'm sure that they have done a lot of work and I would like to know what is the work that has been done till now and we will take it forward," Ranjan said.
The panel was tasked to draft direct tax laws in line with the laws prevalent in other countries, incorporating international best practices, and keeping in mind the economic needs of the country. In 2009, former finance minister P Chidambaram had proposed a direct taxes code to replace the cumbersome income tax law to embody the principle of keeping taxes low and removing exemptions.
The NDA government, since coming to power in 2014, has already implemented general anti-avoidance rules. In 2016, Finance Minister Arun Jaitley also promised to lower corporate tax rate to 25 percent in five years. Currently, income up to Rs 2.5 lakh per annum is exempted from tax for individuals.