A high powered government task force submitted its reports on Monday, recommending a series of measures to lower the overall tax burden on corporates, starts-up, middle class, and upper-middle class. The contents of reports have not been made public but as per a report published in the Economic Times, the task force has called for a rejig of tax brackets, review of surcharges levied on income tax of super-riches, incentivising start-ups and a revamp of I-T act, making it taxpayer-friendly.
Moreover, the panel has also recommended for a concept of dispute settlement through mediation between the taxpayer and a collegium of officers that is popular overseas. The idea for 25 percent corporate tax for domestic as well as foreign companies has also been mooted by the panel. Notably, at per present rules, the foreign companies are levied 40 percent tax. If proposed changed are accepted the tax rate reduction could prove to be a big fiscal stimulus for the corporate sector reeling under a sharp economic downturn.
The committee submitted its report to Finance Minister Nirmala Sitharaman on Monday and the report is expected to be made public for consultation after due examination. Akhilesh Ranjan, member, Central Board of Direct Taxes (CBDT) headed the committee. The report was expected to be submitted by May 31 but then finance minister Arun Jaitley two months extension to complete the report. One of the people close to development added, "Overall, the emphasis is on designing a tax regime that is simple on compliances, faceless in all interactions with taxpayers and fosters businesses."
The task force has recommended for a separate treatment altogether for start-ups to encourage the culture of entrepreneurship in the country. Further, the report emphasises on reducing litigation and making an interface, which maintains the anonymity to eliminate harassment and corruption. As per the report, assessing officer and litigation unit that is same at the moment will be separated. At the corporate tax front, the report has reviewed capital gains tax regime, minimum alternate tax and dividend distribution tax but the details are yet to be made public.
The proposal if accepted could be a major relief for super-riches that were affected drastically after the central government increased the surcharge levied on top of the applicable income tax rate to 25 percent from 15 percent for those with taxable incomes between Rs 2 crore and up to Rs 5 crore, and to 37 percent. The surcharge affected the stock market badly with foreign portfolio investors (FPIs) pulling out billions of dollars from the stock market.