Representational imageFlicker

The central government on Wednesday set up a task force for redrafting the 50-year-old direct tax (income tax) law in the country, to match with the economic needs.

Arbind Modi, CBDT member (Legislation), will be the convener of the six-member task force with other members, like Girish Ahuja (chartered accountant), Rajiv Memani (chairman and regional managing partner of EY) and Mansi Kedia (consultant, ICRIER), PTI reported.

Moreover, chief economic adviser Arvind Subramanian will be a permanent special invitee in the task force.

"Accordingly, in order to review the Act and to draft a new direct tax law in consonance with economic needs of the country, the Government has constituted a task force," a finance ministry statement said.

Earlier in September, at the annual conference of tax officers, Prime Minister Narendra Modi said that the Income-tax Act was drafted in 1961, which is more than 50 years old and it needed  redrafting.

The task force is mandated to submit its report to the government within 6 months from its constitution.

The task force will evaluate tax system prevalent in various countries, the best international practises and most importantly, the economic needs of the country to prosper, reported the news agency.

Earlier in 2009, the Congress-led UPA government wanted to bring in changes in the Direct Taxes Code (DTC) to simplify the tax legislation for individual taxpayers as well as corporates, but the bill got lapsed in Parliament.

The UPA government DTC bill proposed annual I-T 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.

Currently, an individual doesn't have to pay income tax if the annual income is below Rs 2.5 lakh. And annual income between Rs 2.5 lakh to Rs 5 lakh attracts 5 percent, income between Rs 5 lakh and Rs 10 lakh attracts 20 percent, while those over Rs 10 lakh have to 30 percent income tax.