New Delhi: The stage is being set to simplify income tax (I-T) laws in the country. The government on Tuesday has set up a 10-member committee headed by former Delhi High Court Justice R V Easwar to come up with suggestions to avoid multiple interpretation of tax laws and improve ease of doing business.
A preliminary report is expected by January, 31 — just-in-time to incorporate suggestions for legislative approval in the upcoming Union Budget 2016-17.
The proposed suggestions could form the basis for altering the controversial retrospective applicability of tax.
The committee will study and identify the provisions/phrases in the I-T Act leading to litigation due to different interpretations.
According to Finance Minister Arun Jaitley, the idea is to simplify I-T Act. “We have over the last few months been resolving a lot of past issues and now time has come to look at some provisions of the I-T Act to look at how their drafting quality can be improved in order to avoid ambiguity so that everybody is certain as to what the Act itself says,” he said.
The panel will also study and identify the provisions impacting the ease of doing business as well as identify the areas and provisions of the Act for simplification in the light of existing jurisprudence.
The government had previously used a similar panel headed by former Delhi High Court Judge AP Shah to do away with retrospective applicability of MAT on profits made by FPIs.
Like MAT on FPIs, the other legacy issue facing the government is the Finance Bill 2002 that allowed government to impose tax on corporates on alleged gains made as early as 1962.
Revenue Secretary Hasmukh Adhia said the Eshwar committee can form three sub-groups.
“The sections of I-T Act, which are posing maximum litigations due to wrong drafting would be worked up on by the committee.”
The panel, which will have a term of one year, will set its own procedures for regulating its work.
“The committee can also work in sub-groups and the draft prepared by the sub-groups can then be approved by the whole committee. The committee will puts its draft recommendations in the public domain. After stakeholder consultations, the committee will formalise its recommendations. It can give its recommendations in batches. The first batch containing as many recommendations as possible shall be submitted by January 31,” an official statement said.
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