Shreya Nandi Moneycontrol News
A revamp of India’s direct tax system may not be a reality till at least 2020 as the panel on Direct Tax Code (DTC) will take three-four months to submit the draft on the new law.
The government is in the process of appointing a new convenor as Arbind Modi, who heading the six member task force, as well as the member of the apex policy making body Central Board of Direct Taxes (CBDT), retired on September 30.
Akhilesh Ranjan, Member, CBDT is likely to be the head of the panel on direct tax code, a top government official told Moneycontrol.
“After the report is submitted, the draft will be out for public consultation, which will again take another six months,” the official said.
While the Narendra-Modi led government will complete a five-year tenure in May, 2019, the decision to take forward the overhaul of the direct tax system will depend on the new government that comes to power.
The discussion on reforms pertaining to taxation started more than a year back in September, 2017, when the Prime Minister Narendra Modi said that more than half a century old Income-Tax Act needs to be re-drafted and a new DTC needs to be introduced in ‘consonance with economic needs of the country’.
Acting upon it, the finance ministry on November 22, last year constituted a task force comprising six members, as well as the Chief Economic Adviser (CEA) Arvind Subramanian, as a permanent special invitee in the task force.
Subramanian is currently not a part of the committee as he resigned from his post of CEA last month to return to academic research in the US. Besides, the government is yet to appoint a new CEA.
Girish Ahuja, practicing chartered accountant and non-official director, State Bank of India, Rajiv Memani, chairman and regional managing partner of E&Y, Mukesh Patel, practicing tax advocate in Ahmedabad, Mansi Kedia, consultant, ICRIER, and G.C. Srivastava, retired bureaucrat are also a part of the team.
The panel was supposed to submit the draft report on May 22, but sought an extension of three months that got over in August. With Arbind Modi’s retirement, the work related to the report was put on hold.
The erstwhile UPA government had finalised DTC and had introduced the Bill in the Parliament in 2010. However, the Bill lapsed with the dissolution of the 15th Lok Sabha. It aimed at simplifying tax legislation, widening the tax base, while removing a number of exemptions.
The task force is in the process of drafting a direct tax legislation keeping in mind, tax system prevalent in various countries, international best practices, economic needs of the country, among others. Some of the provisions of the DTC such as General Anti-Avoidance Rule (GAAR) and Place of Effective Management (PoEM) has already been implemented.
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