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What is Direct Taxes Code
Through Direct Taxes Code (DTC), the government aims to simplify the structure of direct tax laws in India into a single legislation. The DTC will replace the Income-tax Act, 1961, and other direct tax legislation like the Wealth Tax Act, 1957.
DTC from 2009 to 2014
The first draft Direct Taxes Code Bill was released on August 12, 2009, and then a Revised Discussion Paper (RDP) was in 2010.
DTC 2010 was introduced in Parliament and the government formed a Standing Committee of Finance (SCF) to discuss it with various stakeholders. The SCF submitted its report to Parliament in 2012. The government took into account the recommendations of the SCF and a 'revised' version of DTC was released in 2014. However, it lapsed when the NDA government came to power that year.
Direct Taxes Code from 2017 to 2019
In 2017, Prime Minister Narendra Modi-led government set up an expert committee to draft a new Direct Taxes Code. The report of the task force on DTC was submitted to Finance Minister Nirmala Sitharaman on August 19, 2019. It is yet to be made public. Akhilesh Ranjan, a CBDT member, is the head of the task force. The other members of the task force are Girish Ahuja (chartered accountant), Rajiv Memani (chairman and regional managing partner of EY India), Mukesh Patel (Practising Tax Advocate), Mansi Kedia (Consultant, ICRIER) and G C Srivastava (retired IRS and Advocate).
Direct Taxes Code 2.0
According to a Business Standard report, the expert panel has recommended a significant increase in the highest income-tax slab, besides slashing the corporation tax rate to an even 25 per cent for both domestic and foreign companies. Income taxpayers earning up to Rs 55 lakh a year might end up with a major tax relief if the panel’s recommendation to change the tax bracket and rebates is accepted.
Key points of Direct Taxes Code 2.0
— Those earning up to Rs 55 lakh may get major tax relief
— Foreign firms may have to pay branch profit tax
— Dividend distribution tax may be done away with
— A slew of incentives for start-ups
— Assessing units to replace assessment officers
— Mechanism of mediation between taxpayers and CBDT
— Proposed DTC to have far fewer sections than over 700 in the Income Tax Act