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Last Updated : Aug 21, 2019 03:59 PM IST | Source: CNBC-TV18

DTC panel's proposals may focus on cleaning up, making tax code more efficient, says A Prasanna

The government-appointed task force on direct taxes submitted its recommendations to Finance Minister Nirmala Sitharaman on August 19.

CNBC TV18 @moneycontrolcom

The focus of the Direct Taxes Code (DTC) panel, which has submitted its recommendations to finance minister (FM) Nirmala Sitharaman, is likely to be on cleaning up and making the tax code more efficient, said A Prasanna, chief economist at I-Sec PD.

The government-appointed task force on direct taxes submitted its recommendations to Finance Minister Nirmala Sitharaman on August 19.

The recommendations have not been made public as of now but according to an exclusive newsbreak from taxsutra.com’s Arun Giri, there are a host of proposed changes.

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According to sources, the tax force has batted for a big tax relief for the middle class and individuals earning up to Rs 50 lakh per annum.

“We don’t know what all is in the report. It is important that we get to know what the entire report is talking about. On that basis only one can come to a conclusion. Typically I would assume that the focus of this panel would be on cleaning up and making the tax code more efficient,” said Prasanna in an interview with CNBC-TV18.

“What is the fiscal cost is something that the government has to take a call on and therefore what could happen is maybe these recommendations don’t get implemented in one go and what we are going to get is only a piecemeal implementation as and when the fiscal space opens up,” he added.

Kavita Rao of NIPFP said, “I would also suggest that there is not much reason to go around this hacking the rates because if the objective is to bring in more people and the largest numbers of missing taxpayers tends to be at the lowest end of the tax bracket, at 5 percent you don’t have much space to even cut it further to try and encourage compliance. I think we should be looking at trying to find other ways to augment compliance not really the tax rate route."

“There is very little that is left that you can tinker with on the exemption list. The big-ticket items are something like accelerated depreciation which no government wants to touch but having said that, there is a commitment to reduce its tax rate. The headline tax rate to 25 percent for all corporate players and that still needs to be done because the large corporates are still looking at higher tax rates. That is a change that needs to be now brought in unilaterally and I don’t see that turning itself into a revenue mobiliser for the government,” she further added.

Source: CNBC-TV 18

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First Published on Aug 20, 2019 06:40 pm
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