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Finance Minister Nirmala Sitharaman on Thursday said that the proposed new Direct Taxes Code (DTC) to replace the existing income tax law (enacted in 1961) was “under examination” of the Finance Ministry.
“We are looking into the report of the Task Force and is under examination of the Ministry,” Sitharaman said during her reply to the discussion on the Taxation Laws (amendment Bill in the Rajya Sabha.
The Finance Minister’s latest remarks is a clear pointer towards the government’s plan to have a modern income tax law is still on the table and not off its radar, said economy watchers.
The upper house later returned the Bill to the Lok Sabha, paving the way for the replacement of the September 20 ordinance that among other things introduced a new 15 per cent corporate tax rate regime for new companies in the manufacturing sector.
It may be recalled that a government-appointed Task Force, where CBDT member Akhilesh Ranjan was its convenor, had submitted its report in mid August this year. This report is now under the consideration of the Finance Ministry.
Prime Minister Narendra Modi had in September 2017 on the occasion of the annual conference of tax officers observed that the Income Tax Act 1961 was drafted more than 50 years ago and needed to be redrafted.
The Task Force was originally expected to submit the report by May 31, but was given an extension of two months by former Finance Minister late Arun Jaitley.
This task force was subsequently allowed to submit its report by August 16 in the wake of requests for more time from new members.
More reforms
The Finance Minister asserted that the government’s move to cut corporate taxes — which could lead to revenue foregone of ₹1.45 lakh crore — was not just intended for creating “good atmospherics or good headlines or good PR”, but for “good reforms”.
“This government is committed to reforms and you will see more reforms (in the coming days).
“This government has been sensitive and responsive to the emerging situations and not waited for things to develop,” she said.
Sitharaman also said that the Bill is similr to the ordinance that was sought to be replaced and that a few additional provisions have been added in the Bill to provide greater clarity.
She said that the government had to resort to ordinance route to quickly respond to the developing global situation — impact of the US-China trade war and many foreign companies’ plan to relocate outside China in the wake of the trade war.
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