The government is planning to place the income-tax rates in the new
direct tax code schedule. The schedule is akin to an annexure to the
Act. This will give the government flexibility to change them without
disturbing the whole Act.
“We
are looking at substantive changes in the Act, giving a fresh look at
various procedures,” a revenue department official said, adding the
main objective would be keep the main body of the Act simple and
taxpayer-friendly.
Including the tax rate in the schedule would
allow the government to change rates by just proposing an amendment to
the schedule without amending the body of the Act.
In situations
where the government is unable to specify income-tax rates in the
Finance Bill, there is no provision in the law allowing tax authorities
to impose a certain rate. In fact, the present Act clearly mentions the
rate of taxation would be specified in the central Act.
“It is
expected that the new direct tax code will further simplify the
income-tax law and be simpler to understand. Further, if the rates of
taxation are provided in the schedules forming part of the Act itself,
then it will avoid litigation in respect of the tax rates and
additional levies such as surcharge, cess, etc,” according to KPMG
director Vikas Vasal.
Imposition of cess and surcharge has been
challenged in various courts of law as these were brought in the
Finance Act and there was no provision specifying the levies in the Act.
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