International NewsGovt sets up panel to draft new Income Tax law with Arvind Subramanian as special invitee By Fabnewz Team Posted on November 23, 20170 0 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr After the overhaul of indirect taxes, the government is now gearing up for the review of direct taxes, which have been in force since 1961.After the overhaul of indirect taxes, the government is now gearing up for the review of direct taxes, which have been in force since 1961. Kicking off the process, the government has set up a seven-member task force to draft a new direct taxes law.This comes on the back of comment made by Prime Minister Narendra Modi during the annual conference of tax officers in September that the Income-tax Act, 1961 was drafted more than 50 years ago and it needs to be redrafted. “Accordingly, in order to review the Act and to draft a new direct tax law in consonance with economic needs of the country, the Government has constituted a task force,” a finance ministry statement said on the formartion of the new task force.The task force is headed by Arbind Modi, Member (legislation), CBDT. Arvind Subramanian, Chief Economic Adviser, will be a permanent special invitee in the Task Force. Other members of the of the task force include Girish Ahuja, practicing chartered accountant and non-official Director of State Bank of India; Rajiv Memani, Chairman & Regional Managing Partner of E&Y; Mukesh Patel, Practicing Tax Advocate, Ahmedabad; Mansi Kedia, Consultant, ICRIER, and G C Srivastava, retired IRS (1971 Batch) and Advocate. The task force would draft direct tax laws in line with tax laws prevalent in other countries, incorporating international best practices, and keeping in mind the economic needs of the country. The task force would submit its report to the government within six months.The Modi government, since assuming power in 2014, has already implemented general anti-avoidance rules GAAR. Finance Minister Arun Jaitley also promised in 2016 to lower corporate tax rate to 25 per cent during the course of 5 years. As of now, individual taxpayers with an annual income up to Rs 2.5 lakh are exempt from paying income tax.This would not be the first attempt to change the Income Tax Act in the country. Back in 2009, the incumbent UPA government had come up with the Direct Tax Code to make tax legislations easier to comprehend for individual as well as corporate taxpayers. Later the Direct Taxes Code (DTC) Bill was tabled before the Parliament back in 2010. The Bill had suggested that annual income up to Rs 2 lakh should be exempted from income tax. Apart from this, the DTC Bill proposed levying 10 per cent income tax on annual income between Rs 2 lakh and Rs 5 lakh, 20 per cent on annual income from Rs 5-10 lakh.The Bill mandated that 30 per cent income tax should be levied from taxpayers with annual income above Rs 10 lakh. Similarly, it suggested that domestic companies should pay income tax at a rate of 30 per cent of their business income. The DTC Bill, however, lapsed with the dissolution of the 15th Lok Sabha.