Government sets up committee to review income tax law

 NEW DELHI: The government has set up a committee under a former Delhi High Court judge to review the income tax law and identify clauses that lead to litigations or adversely impact the ease of doing business, underlining its resolve to address all tax related issues. The 10-member panel, headed by Justice RV Easwar (retd), has been tasked with submitting the first batch of report by January 31, before the budget for 2016-

17. Finance Minister Arun Jaitley said the main idea behind setting up the panel is to make the I-T Act taxpayer friendly. "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," Jaitley told the media at the launch of e-Sahyog, a pilot project of the income tax department to facilitate taxpayers. In a four-point terms of reference, the government has asked the committee to study and identify the provisions/phrases in the Act which are leading to litigation due to different interpretations, those impacting the ease of doing business, and areas and provisions of the Act that need to be simplified. The government wants the committee to "suggest alternatives and modifications to the existing provisions and areas so identified to bring about predictability and certainty in tax laws without substantial impact on the tax base and revenue collection," a statement issued by the finance ministry said. The committee can give its recommendations in batches.

"So, as and when it keeps giving one bundle of suggestion with regard to simplification we will examine them and whichever are found acceptable we will try and simplify those provisions of the I-T Act," Jaitley said. The government had set up a committee under Jus tice AP Shah to review the provisions relating to minimum alternate tax or MAT on foreign portfolio investors. Based on the recommendation, the government has successfully closed the issues, directing officials not to take action in such cases.

"The committee is expected to give its first set of recommendations by January 2016 and taxpayers can expect to see certain measures in the next budget to further streamline the tax laws," said Homi Mistry, partner at Deloitte Haskins & Sells.

ET had earlier reported that the government was looking at such a mechanism to address some tax cases like those relating Cairn India. The income tax department has said Cairn UK Holdings made acapital gain when in 2006 it transferred all its India assets to a new company, Cairn India, and subsequently got it listed on the stock exchanges. The department has slapped a tax demand of Rs 20,495 crore on Cairn India for failing to deduct withholding tax on alleged capital gains made by its former parent Cairn UK Holdings. The company has served a notice of arbitration on the government.

The other high-profile tax dispute that is yet to be resolved is the Vodafone case.

E-sahyog to help taxpayers

Finance Minister Arun Jaitley on Tuesday launched e-Sahyog, a paperless initiative of the Central Board of Direct Taxes to connect with taxpayers. Under the initiative tax notices will be sent to the email addresses of taxpayers. The department has already started a pilot of sending notices over email, receiving responses and making tax assessments so that taxpayers don't have to visit I-T offices in cases involving small amounts. The finance minister also announced permanent account number or PAN camps to get more people under coverage, which is crucial to the government's attempt to make the number mandatory for more transactions.

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