India appoints new task force head to update Income Tax Act India appoints new task force head to update Income Tax Act

India appoints new task force head to update Income Tax Act
05 Dec 2018

The Indian Government plans to take a fresh look at updating the Income Tax Act, 1961, after the leader of a panel that was rewriting it retired. 

Akhilesh Ranjan, a member of the Central Board of Direct Taxes (CBDT), will head the new task force, which is intended to advise the Government on drafting a new direct tax law to suit India’s current economic requirements. Other members of the task force will remain the same. The report is to be submitted by 28 February, 2019.

The Modi Government has so far attempted to phase out corporate tax concessions, reduce corporate tax rates for small businesses to 25% and give relief to small income earners by lowering tax rates. It has also plugged loopholes in bilateral tax treaties with Mauritius to prevent tax-evaded money coming back into the country in the form of foreign direct investment.

Although the new law is expected to make taxation more progressive, the task force is unlikely to propose a difficult-to-implement inheritance tax. A tax official told LiveMint: “Although it may be easier to say that one should tax the rich more, implementing an inheritance tax is complex. It can only lead to high-income earners getting resettled elsewhere.”

Meanwhile, a few tax changes were announced in the Union Budget for the 2018-19 financial year, according to Latestly. Individuals earning between Rs250,000 (US$3,152) and Rs500,000 (US$6,304) will have to pay between 0% and 5% tax based on different age groups, while a 20% tax rate will be applicable on incomes of Rs500,000 (US$6,304) to Rs1 million (US$12,609).

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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The Indian Government plans to take a fresh look at updating the Income Tax Act, 1961, after the leader of a panel that was rewriting it retired. 

Akhilesh Ranjan, a member of the Central Board of Direct Taxes (CBDT), will head the new task force, which is intended to advise the Government on drafting a new direct tax law to suit India’s current economic requirements. Other members of the task force will remain the same. The report is to be submitted by 28 February, 2019.

The Modi Government has so far attempted to phase out corporate tax concessions, reduce corporate tax rates for small businesses to 25% and give relief to small income earners by lowering tax rates. It has also plugged loopholes in bilateral tax treaties with Mauritius to prevent tax-evaded money coming back into the country in the form of foreign direct investment.

Although the new law is expected to make taxation more progressive, the task force is unlikely to propose a difficult-to-implement inheritance tax. A tax official told LiveMint: “Although it may be easier to say that one should tax the rich more, implementing an inheritance tax is complex. It can only lead to high-income earners getting resettled elsewhere.”

Meanwhile, a few tax changes were announced in the Union Budget for the 2018-19 financial year, according to Latestly. Individuals earning between Rs250,000 (US$3,152) and Rs500,000 (US$6,304) will have to pay between 0% and 5% tax based on different age groups, while a 20% tax rate will be applicable on incomes of Rs500,000 (US$6,304) to Rs1 million (US$12,609).

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER ARTICLES THAT MAY INTEREST YOU

India restores minimum wage increase

Key payroll considerations in India

India plans welfare programme for poor

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