India to simplify income tax law to ease doing business

By Manoj Kumar

NEW DELHI (Reuters) - India has set up a new panel to simplify the country's 55-year-old income tax law, Finance Minister Arun Jaitley said on Tuesday, part of an effort to make it easier to do business in Asia's third-largest economy.

The panel will suggest ways to create predictability and certainty in tax laws without having a substantial impact on the tax base and revenue collection, Jaitley told reporters.

Prime Minister Narendra Modi has asked various ministries to review laws, aiming to improve country's ranking in the World Bank's index of the ease of doing business index.

India ranked 142 among 189 countries in the 2015 report, two notches lower than the previous year. The World Bank will release its latest annual report on Wednesday.

The 10-member panel, headed by a former judge of the Delhi High Court, has been asked to submit its first set of suggestions by the end of January 2016.

Revenue Secretary Hasmukh Adhia said the government plans to use the recommendations to introduce changes in the income tax law in the annual budget due the following month.

The panel has also been asked to identify provisions in the tax law which are leading to litigation because of different interpretations.

India remains locked in major back-tax battles with telecoms group Vodafone and Cairn Energy. Last month, the finance ministry decided not to press claims for a Minimum Alternate Tax (MAT) against foreign portfolio investors.

The new panel will not, however, look into retrospective tax issues, Adhia said, adding the government will take a separate decision on those.

Jaitley has said previously that the government was trying to resolve pending tax disputes, many of them outside the courts.

(Reporting by Manoj Kumar; Editing by Douglas Busvine, Larry King)