Task force on Direct Tax Code to submit report by July 31: FM
New Delhi, Jul 18 (PTI) Finance Minister Nirmala Sitharaman on Thursday said that a task force on the new Direct Tax Code will submit its report by month end. The new direct tax code is set to replace the existing Income Tax Act.
The aim is to reform the complex income tax laws into simpler tax codes with reduced rates, fewer exemptions, and tax slabs.
“Task Force is already working on finalising the report on a new Direct Tax Code which is required to be submitted by July 31. The government will receive the report and we shall take a call on it,” she said while replying on the debate on the Finance Bill 2019.
Earlier, the task force was supposed to submit its report by May 31, but the then finance minister Arun Jaitley gave two months extension to complete the same.
Source:The financial express
These days you might be hearing this term DTC in news,let us checkout what is this and all you need to know about DTC.
Dtc is an attempt by government of India to simplify the tax laws of India.Basically,it will revise and consolidate the complex direct tax laws.The DTC, when implemented will replace the Income-tax Act, 1961 (ITA), and other direct tax legislations like the Wealth Tax Act, 1957.
Why new DTC?
The new direct tax code is set to replace the existing Income Tax Act. The aim is to reform the complex income tax laws into simpler tax codes with reduced rates, fewer exemptions, and tax slabs.
Prime Minister Narendra Modi, during the annual conference of tax officers in September 2017, had observed that the Income-tax Act, 1961, was drafted more than 50 years ago and it needs to be redrafted.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, 2018, which was further extended till August 22. Following Arbind Modi’s retirement on September 30, 2018, Akhilesh Ranjan-led panel was tasked to submit report by February 28, 2019. It was then extended till May 31.
Need and major targets of DTC
The tax code in its current form poses challenges in terms of not only being voluminous, but complex as well, leading to arguably the biggest challenge – interpretation and associated litigation.
Needless to say, the key expectation is that not only equity, but simplicity, certainty and stability should be embedded in the law. It should be simple to understand, provide certainty and be free from ambiguity around its application as well as implementation.
A lower rate for lower incomes and high rates for higher incomes will ensure better balance. The threshold for income tax levy needs to be revised periodically to counter the effects of inflation. It needs to be realised that tax rates should be moderate, to incentivise and to promote a robust, growth-oriented investment climate.
The new draft report on the direct tax code will modify five major procedures pertaining to tax litigation, faceless scrutiny, exchange of information, compliance, and financial transactions.
Over lakhs of cases are pending before appellate authorities. It is foreseen that if laws are made simple, litigation may be reduced. Further, processes in assessment of tax, and for appeals thereafter,should be simplified.As of March 2017, tax disputes worth ~7.6 trillion were stuck in tribunals, high courts, and the SC.
The CBDT has been working on the concept of faceless scrutiny and jurisdiction-free assessment for some months. Faceless scrutiny is a system where a taxpayer need not interact with the tax official. Jurisdiction-free is the mechanism where an assessing officer is not aware of the assessee’s location.
Further, sharing of information between the GST, Customs, and the CBDT teams has been started and needs certain changes to make it hassle-free. Besides, the current framework on compliance may be further tweaked to make tax filing and return more user-friendly. The new draft will also have a mechanism for cross-verification of financial transactions.
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