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Experts' hope high from direct tax code
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SME Times News Bureau | 19 Aug, 2019
With the direct tax code (DTC) being in the works for years and report
of the task force expected anytime now, tax experts hope the new draft
law would ease compliance burden and reduce future litigations by
incorporating orders of various high courts and the Supreme Court while
settling the cases.
"Broadly, easing the tax and compliance
burden, bringing in simplification and certainty in tax provisions and
compliances, and introducing provisions facilitating merger and
acquisition (M&A) activity and other restructuring will be the major
asks from corporates," said Amrish Shah, Partner, Deloitte India.
Rahul
Garg, Senior Partner (Tax & Regulatory), PwC India said that his
expectation is that the new DTC would be a modern law which would make
tax administration technology enabled. Further, it would make tax
governance effective.
The Modi government in its previous term
had set up an Expert Committee in 2017 to draft a new Direct Tax Code
(DTC) to replace the decades-old Income Tax Act, 1961. The panel's terms
of reference (ToR) and constitution were changed earlier and therefore
deadline for submitting the report was also extended on at least three
occasions.
Akhilesh Ranjan, a CBDT member, is the head of the
Task Force. Members of the task force also include Girish Ahuja
(chartered accountant), Rajiv Memani (chairman and regional managing
partner of EY India), Mukesh Patel (Practicing Tax Advocate), Mansi
Kedia (Consultant, ICRIER) and G.C. Srivastava (retired IRS and
Advocate).
Central Board of Direct Taxes (CBDT) is the apex policy-making body of the Direct Tax department.
Given
that increasing the taxpayer base is one of the key result areas (KRAs)
of the Tax Department, the panel is expected to suggest ways for
simplifying the process for filing annual income tax returns (ITRs),
especially for salaried taxpayers.
"The biggest thing one can
expect that the settled positions which have come through courts are
incorporated so that there are fewer litigations in the future," said
Riaz Thingna, director, Grant Thornton Advisory Pvt Ltd.
A tax
advisor associated with one of the Big-4 consultancies, however, said
that the new draft law would unlikely incorporate all the court orders.
"It will only include those where the Tax Department has got favourable orders," he said.
The
report of the Task Force would come at a time when the economy is going
downhill with most macro indicators pointing to a slowdown. Various
sectors such as automobile and real estate are going through one of the
worst crisis in recent years with demand for relief package growing by
the day.
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