Panel on direct tax laws to look into cross-verification of financial transactions, data sharing

The task force set up to draft a new direct tax law to replace the existing Income Tax Act would also look into mechanism for cross-verification of financial transactions and sharing of data between various agencies, the finance ministry said Wednesday.

The ministry has broadened the terms of reference (ToR) of the task force, headed by CBDT member Akhilesh Ranjan, to also include faceless and anonymised verification/ scrutiny/ assessment and reduction of compliance burden by simplification of procedures.

The committee would also look into various aspects of sharing of information between goods and services tax, customs, Central Board of Direct Taxes and Financial Intelligence Unit, besides reduction in litigation and ways for expeditious disposal of appeal cases.

"In view of the expanded ToR which includes sharing of data between agencies, it has been decided to nominate joint secretary in the Department of Revenue Ritvik Pandey as member of the Task Force as well," said the office order issued by the Central Board of Direct Taxes (CBDT).

The task force would submit its report by July 31. It was widely expected that the task force would submit its report before the Budget to be presented on July 5, but the government in May gave a two-month extension to the committee till July 31.

The order also says that Chief Economic Adviser Krishnamurthy Subramanian would replace former CEA Arvind Subramanian as member of the task force.

The finance ministry in November last year appointed Akhilesh Ranjan, member (legislation) of CBDT, as convenor of the task force after the retirement of Arbind Modi.

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).

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.