Direct Tax Reforms Panel: Easwar Committee Recommendations

Introduction

GOI has established the tax reforms panel to streamline the indirect and direct tax policy for transparent administration.

Direct Tax Recommending committee’s

• Parthasarthy Shome committee recommended the establishment of two tax panels
• Tax Policy Research Unit (TPRU) and
• Tax Policy Council (TPC)
• Easwar committee recommendations on Tax Deducted at Source (TDS)

Tax Policy Council

• Headed by Finance Minister
• Advisory in nature
• Identify key tax policy decisions
• Suggest broad taxation policy measures
• Nine member body including

           1. NITI Aayog Vice Chairman
           2. Minister of state, Finance
           3. Finance Secretary
           4. Commerce Minister
           5. Chief Economic Advisor
           6. DEA Secretary
           7. DIPP Secretary
           8. Revenue department secretary

           9. Secretary of commerce department

Tax Policy Research Unit

• Multi disciplinary body
• Analyze and examine any tax policy or fiscal referred by CBDT and CBEC
• Disseminate and prepare background papers and policy documents pertaining to various taxation issues
• Comprises officers from CBDT, CBEC, economists, researchers, statisticians and legal experts

Easwar Committee recommendations

• Retired High court Judge Easwar committee was formed by GOI to change the direct tax laws
• The committee recommends for simplification in TDS
• Tax refunds to be made faster
• Deduction from taxable income slab revision
• Stock market gains up to 5 lac will be treated as capital gains
• These stock market gains are exempt from business income encouraging more retail investments in the stock market
• Tax payer friendly reforms introduced to align with Ease of Doing Business
• TDS rates reduced from 10% to 5% for individuals
• Income tax department transactions to be made in an electronic manner and human interface to be minimized to the core
• Presumptive scheme for business increased from 1 crore to 2 crore
• This step will make business people life easier and relaxing

Implications of these reforms

• Project Saksham of digitalizing the Income Tax department is a direct implication of these tax reforms
• Project Insight launched to monitor income tax transactions
• Project e-sahyog launched to reduce the hassles of the small tax payers
• This makes it easy for tax payers to pay tax online and eliminates their visit to the income tax department offices to pay taxes and lodge their grievances
• Tax payers grievances are recorded online and addressed accordingly
• The tax reforms aim to bring more transparency in the direct tax sector

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