The government may soon announce a reconstituted direct tax code (DTC) task force, with central board of direct taxes (CBDT) member Akhilesh Ranjan as its new chairman. A fresh task force means any draft direct tax code (DTC) and an accompanying report may not be submitted to the government before the 2019 general elections.
The previous task force, led by former CBDT member Arbind Modi, could not reach a consensus on a number of issues and its work was considered incomplete, with only two of the six members signing off on the report and draft law, Business Standard has learnt.
Sources said the last meeting of the old panel was held on September 16, where it was decided that they would ask for additional time as consensus was not reached on all issues. However, there has been radio silence on what happened that day. Modi retired on September 30 without the report and the draft law being submitted to Finance Minister Arun Jaitley.
Apart from Modi, the panel included Girish Ahuja, a chartered accountant and director of State Bank of India’s board; Rajiv Memani of EY; Mukesh Patel, a tax advocate; Mansi Kedia of ICRIER; and retired Indian Revenue Service officer G C Srivastava. The government is considering whether to bring in new members or continue with the members of the oil committee, with Ranjan as its chairman.
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The old DTC panel was set up by the government in November last year to review the Income Tax Act and to draft a new direct tax law in consonance with economic needs of the country. It was originally expected to submit its report to Jaitley by May-end. That deadline was first extended by three months to August 31, and then by another month.
This was because some of its earlier recommendations revealed to finance ministry officials in internal meetings, were too similar to the draft DTC proposed by former Finance Minister P Chidambaram. The government wants its DTC to be completely different from its predecessor.
It is currently unclear if the new committee will build upon the report of the Arbind Modi panel or start from scratch. As reported in Business Standard earlier, one of the biggest changes that draft law has likely proposed is to do away with jurisdiction-based assessment and replace it with specialized teams of direct tax officials assessing specific cases.
The proposal of a DTC to replace the existing income tax laws was first mooted during former Prime Minister Manmohan Singh’s government. In 2009, the UPA government came out with a draft DTC to simplify the tax legislation for individual taxpayers as well as corporates.