New Income Tax Law, What’s New expected
After long discussion & justification, the new income tax law is now finally set to be in place. Recent task force committee headed by respected senior IRS officer Shri Akhilesh Ranjan and comprising of team of eminent persons with vast practical experience, has FINALLY given its report to the Government.
After around 60 years of Income Tax Act – 1961, new income tax law will be in place. It may not be named as “Direct Tax Code” but expected to be titled as “Income Tax Act” only. With absolute majority in the Parliament & enough time at the disposal of Modi Government, the new income tax law is sure to see the light of the day now.
Everyone is eagerly awaiting for the look of the new documents which is not yet made public. Is it an old wine in the new bottle or altogether new wine is what needs to be seen! Apparently, there is expected to be 360 degree change in the new law and procedure.
Everyone is guessing as to what it could have. Here are my guess work about the changes that could find place in the new Act.
- No more concept of previous year or assessment year. It will have only “Financial Year” as taxable year.
- The concept of HUF will still be there in the new law.
- There may not be long Explanation & Proviso in the new Act.
- The language will be simple and lucid which even a layman can understand. Further, Shorter, section would be short & easy to read.
- The new law may have the same structure as was prevailing in Income Tax Act-1961.
- It will be having around 300 sections which will be around 50% of the existing Income Tax Act – 1961. The size of the new bill would also be around 50% of existing size.
- The new law is to be followed by Income Tax Rules.
- The new law will be drafted in such a way that the required changes as far as the income tax slab, TDS rate, etc can be carried out by respective Finance Act.
- New Act will be referring to the financial year and so it will not require any change in the new law if the Government decides to move from March ending concept to December year concept.
- The rate of taxation will totally be the part of the finance bill and may not find any place in the new law.
- The new law will altogether find new law and procedures as far as assessment is concerned. It will make everything e-system replacing the existing mechanism in totality. It is likely to introduce the system of “Assessment unit” as against “Assessing Officer”. Further, it will even make provision for outsourcing of the work by the officers to the outside agencies for processing.
- The key thrust would be there on transparency in working and due respect and regards to the taxpayer before assessment unit make any additions to the returned income.
- The strongest change can be witnessed in settlement or litigation management. It will reduce the appeal workload of the department in days to come.
- The concept of “Advance Ruling” as prevailing in GST & International taxation will be there for all the provisions in the new law.
- There will be reasonably well visualized transformation provision for carry forward of loss of earlier Income Tax Act – 1961 regime.
- Special rate of taxation like section 115BBE which provide for levy of tax up to 60% will not find any existence in the new law.
- Dividend distribution tax, Deemed dividend provision, MAT & AMT may not be there in the new Income Tax Law.
- Various exemptions and deductions available in the old law like section 80IA, 80P, etc will not have any place in the new law. However, the commitment done in earlier Act for some period (i.,e., deduction with sunset clauses) will be continued till its expiry. However, start up will find special favour in the new Income Tax Law.
- The biggest news, there may not be any “Inheritance Tax” as was in discussion since last few years.
Hold the breadth till the new document is made public for comments and representations. Undoubtedly, there would be lot of representations on the new law. Let us hope that the mistakes committed while implementing GST may not be there while implementing new Income Tax Law.