I-T Act redraft panel will make rules simple, not alter tax rates
New Delhi: The task force set up to redraft Income Tax law will focus on removing the ambiguities, rather than suggesting dramatic policy changes and tweaking of tax rates, the panel's convenor Akhilesh Ranjan said Tuesday. Ranjan said that the six-member task force formed to redraft the over 50-year old I-T law will meet shortly to draft a new law 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 here. He said that there are clauses, provisos and explanations which have been added to the I-T 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. "
"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 (CBDT). The task force was set up by the finance ministry in November last. Arbind Modi was made the convenor of the panel and he retired on September 30.
On November 26, Ranjan was appointed as the new convenor, who has been mandated to submit the report by February 28, 2019. Asked if the panel would submit any report before the interim budget on February 1, Ranjan said it is unlikely.
The NDA government would be presenting its interim Budget for 2018-19 on February 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 needs to be redrafted.
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, ICRIER) and G C Srivastava (retired IRS and advocate). "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.
Former finance minister P Chidambaram had in 2009 proposed a direct taxes code (DTC) to replace the cumbersome IT 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 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.
Meanwhile, Revenue secretary Ajay Bhushan Pandey on Monday declined to comment on reports of government planning an excise duty hike on petroleum products following fall in crude prices, saying an "analysis" is required on it.
In the face of mounting public pressure, the Centre had in October cut excise duty by Rs 1.50 per litre on both petrol and diesel after a rally in global crude prices and also asked oil marketing companies to lower the retail prices by Re 1 each. It was emulated by some states, mostly BJP-ruled states.
However, crude prices have corrected by over 30 per cent since then to under USD 60 a barrel levels, which has lowered fuel prices correspondingly and technically made space for a review.