Task force Committee for drafting the new income tax law for the country is likely to submit its final report by 31^st July.

The committee was set up in the last Government when the decision was taken to scrap the Direct Tax Code proposed by the earlier Government and the work was assigned to the present task force committee for drafting an altogether new tax law. Some of the members were common in earlier committee vis a vis new committee. It consists of eminent personality having vast experience in the Income Tax filed.

The name to the new income tax law proposed is “Income Tax Act” and not “Direct Tax Code”.

What is expected in the new Income Tax Act?

It is expected that the new Income Tax Act will be much easy and simplified which can be understand by even the layman.

Existing Income Tax Act-1961 is full of explanations, proviso and numerous cross linking provision.

It is expected that the words like

1. “Notwithstanding…”
2. provided that …
3. Further Provided that…
4. Explanations….

are not going to find the place in the new bill.

It is expected that there will be same heads of computation as was there in earlier regime. However, there will be less deduction and exemption provisions. It is expected that the capital gain exemption provision will be there for “roll over” of the capital assets with new nomenclature. Even sale of commercial property and its investment back in commercial property would offer capital gain tax benefit. The new income tax law will probably ensure less litigation, ease of business and lesser compliances.

Most important, there will not be any concept like assessment year or previous year. There will be only financial year concept expected in the new law.

From when the new Act will be implemented?

It is expected that the new task force in all probability will give its report on 31^st July and thereafter the Government may place it in public domain for inviting feedback & suggestions for next 3 months. The suggestions and feedback will then be forwarded to the standing committee of finance for its report.

It may happen that the Union Budget – 2020 may place roadmap for implementation of the new law. It may happen that Government can shift to December ending concept from 2020 itself. If it so happens then the new law may have its implementation from 1^st January 2021 and as a result, there will be enough time it will give enough time to Government to ensure its smooth and soft implementation of new law during its current tenure itself.

December ending as the Financial year

The concept of assessment year or previous year is not going to be there in the new income tax Act. And so, even if the Government decides to move to December ending concept instead of March, it won’t require any change in the new Law. It may happen that the Government may announce its decision to shift to December ending as financial year along with the implementation of new income tax law.