The report, which aims to overhaul the Income Tax Act, has not been released to the public, but its recommendations are expected to cover four primary areas. First, corporate taxes where India Inc has asked for a lowering of tax rates to 25 percent. While the government has progressively reduced rates (this Budget brought all companies with revenues of ₹400 crore at a 25 percent tax rate), it has still left out large companies. Reducing rates for them would result in ₹100,000 crore lower tax revenues, estimates Jairaj Purandare, chairman of JMP Advisors. He expects DTC to lay out a path to get there. Companies could also be exempted from dividend distribution tax.
The General Anti-Avoidance Rule or GAAR introduced in April 2017 has been a source of frustration for corporates. Mergers, acquisitions and amalgamations are often questioned when tax authorities don’t agree with valuations. The DTC is likely to have a detailed set of rules that lay down the grounds on which assessments can be opened. Lastly, expect authorities to go slow on disputes relating to angel tax.
First Published: Aug 29, 2019, 15:47
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