New Income Tax Bill – Key Recommendations of Task Force Report

The Government had constituted a task force in November 2017 to draft a new direct tax law in consonance with economic needs of the country which shall replace the 58-year-old existing Income-tax Act, 1961 (‘Act’). The task force has submitted its report on the new direct tax law the recommendations of which have not been made public as yet.
However, based on inputs from different sources, please find below recommendations which the task force may have put forth through its report:

Abolition of dividend distribution tax which is a tax required to be paid by the companies distributing dividends to its shareholders and instead levy of tax in the hands of shareholders.
Reduced tax rate of 25% for all corporates including foreign companies.
Introduction of a new slab rate for individual taxpayers earning income up to INR 5 million.
Levy of branch profit tax in addition to normal tax on repatriation of profits to foreign headquarters.
No inheritance tax to be introduced.
Abolition of 10% tax on long term capital gains exceeding INR 100,000 under Section 112A of the Act.
Restructuring of existing Minimum Alternate Tax provisions to be carried out.

Change in reassessment provisions of Section 147/148 of the Act such as increase in threshold limit for re-opening of cases and criteria for selection of cases to be more stringent.
Establishment of Assessment Units to carry out assessments in place of Assessing Officers.
Establishment of Functional Units (‘FU’) for carrying out transfer pricing assessments and handling of industry specific tax matters. Further, separation of transfer pricing assessments carried out by FU from regular assessments.
Establishment of separate Litigation Management Units for managing the entire tax litigation process.
Panel of mediators to be formed who would assist in negotiation between tax department and taxpayers for settlement of disputes.
Video recording of statements made during the course of search & seizure and survey operations which shall help the tax department in proving that no pressure or coercion was applied on person while recording the statement.

A slew of incentives for start-ups have been proposed with emphasis on reducing litigation and separate tax treatment for start-ups.
Introduction of concept of ‘public ruling’ by which taxpayers can approach CBDT for clarification on controversial matters.
Use of Artificial Intelligence in tax compliance and administration which shall lead to integration of data

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