Ministry of Finance (Department of Revenue) of India is ready to restructure the Direct Tax. They are going to make it simple and easy through the New Direct Tax Law. We have an over-burdened Income-Tax structure with a complicated language. The changes in the interpretation are going to simplify process for taxpayers. It will also relieve the taxpayers from complicated judicial proceedings related to tax.
Following are some features under the New Direct Tax Law
Digitalization in legal proceedings
Every communication between the taxpayer and tax collector will be in digital form. It will also have a unique document identification number.
No to dividend distribution tax (DDT)
The new direct tax law benefits companies. It relieves them from paying DDT. The current effective rate is 20.35%. Possibility of taxing dividend only in the hands of shareholders will encourage companies to declare a higher rate of dividend in contrast.
Tax Rate Structure
Currently, the tax rate slabs are a bit confusing. It is so because of fluctuations in the relevant years which creates problems for taxpayers. In the New Direct Tax Code, this problem will be resolved as all tax rates are proposed to be prescribed in schedules of the Finance Act. Further, proposed changes in rate schedules of new tax law shall firstly be brought before the parliament. It should be in the form of an amendment bill for approval to commence such changes.
Primarily, the India economy has expanded over a few decades. Resulting in an increase in the tax collection amount. It forces the Income Tax department to think over the cost of compliance incurred by them. Therefore, to keep the language simple for taxpayers DTC is brought. The DTC is very simple to understand and will have lesser number of section as compared to the Old Direct Tax Law.
Easy to Amend
The New direct tax code has been designed in such a manner that the statue has been reflected by the necessary and general principles, up to the extent possible. It describes the rules and schedules in detail.
Single Destination for all Direct Tax laws
Direct Tax Code will replace direct tax laws. DTC will emerge as a single-window solution for all taxpayers. It will eventually pave the way for a unified direct tax reporting system.
To summarize, the above-mentioned features are the main updates in the New Direct Tax Law. We will keep you informed with more such useful information in the legal and financial domain. Kindly subscribe to our updates.