The Finance Ministry of India after make-over of Goods & Service Tax is now headed for restructuring the direct tax structure into a simplified version of law. Under which you will meet with the substantial changes along with in depth interpretation on moot question of current prevailing IT act 1961 which gives rise to faulty interpretations. It also relieves taxpayer with complex tax judicial proceedings.
The salient features are likely to be pronounced under the new direct tax Law.
1. Single Destination for all Direct Tax laws
It can be said that all direct tax law which are in force gets replaced by the direct tax code. DTC will emerge as a single window solution for all taxpayers. It will eventually paves the way for unified direct tax reporting system.
2. Digitalization in legal prosecution.
Introduction of the assessment unit for tax proceedings to deal with individual & corporate taxpayers, will turns to be a big step by that one may get rid from the harassment faced by taxmen. All communication between taxpayers and taxmen will be in digital form. Moreover, all digital communication shall bears a unique document identification number.
3. Easy to Amend.
The New direct tax code has been designed in such a manner where the statue have been reflected by the essential and general principles, upto the extent possible and the detail matter are contained in the rules/schedules.
4. No dividend distribution Tax
The new tax law brings another good concept that might help companies to get relieves from paying Dividend Distribution Tax which is (15% +12% surcharge+3% cess) therefore Effective is 20.35% as well. There is a possibility that dividend shall be taxed only in the hands of shareholders. It may encourage the companies to declare higher rate of dividend in contrast with early trends.
5. Simplified language
The expansion of Indian economy boosts the number of taxpayers in last six decade. But the amount of tax collections was increased moderately in the meantime which forces the department think over the cost of compliance incurred by them. In order to curtails the cost, one must facilitate to design such architecture where taxpayers are facilitating to voluntary compliance the law. This is sought to be achieved by keeping the law in simple language with clarity of intent. The new DTC are very simple with less than 400 section and also replace the number of odd sections in current IT Act 1961.
6. Stable Tax rates
In Current scenoario, there is a lot of uncertainty regarding tax rates of relevant year which are stipulated to finance act of that year due to which taxpayers face difficulties in tax planning for each year. But this issue also get resolve in DTC under which all tax rates are proposed to be prescribed in schedules which obviating the needs of the finance act of every relevant year. Further, any changes is proposed in rate schedules of new tax law shall firstly brought before the parliament in form of amendment bill for approval to commence such changes.
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