The government has formed a task force to draft a new direct tax legislation. The task force will submit its report in six months.
The members of the panel are Arbind Modi, Girish Ahuja, Rajiv Memani, Mukesh Patel, Mansi Kedia and GC Srivastava. Chief Economic Adviser Arvind Subramanian has been given permanent special invitee status in the tax task force.
The committee will look at direct tax system prevalent in various countries, international best practices, economic needs of the country and any other matter connected thereto as a term of reference.
GC Srivastava, Member of Direct Tax Panel, said that there have been a lot of developments at the international level with regard to cross-border taxation and the domestic law has to keep pace with those developments.
The Direct Taxes Code (DTC) Bill, 2010, which was introduced in Parliament in 2010, lapsed with the dissolution of the 15th Lok Sabha.
The Bill had proposed annual income tax exemption limit at Rs 2 lakh, and levying 10 percent tax on income between Rs 2 lakh and Rs 5 lakh, 20 percent on Rs 5-10 lakh and 30 percent above Rs 10 lakh. For domestic companies, it suggested a tax rate of 30 percent of business income.
The NDA government, since coming to power in 2014, has already implemented general anti-avoidance rules (GAAR). In 2016, Finance Minister Arun Jaitley also promised to lower corporate tax rate to 25 percent in 5 years.
Currently, income up to Rs 2.5 lakh per annum is exempt from tax for individuals.