New Delhi: The Indian government on Tuesday set up a high-level committee under a former Delhi High Court judge to suggest simplification of Income Tax laws, a report that could form basis for tinkering with the controversial retrospective applicability of tax.
The 10-member panel, headed by former Delhi High Court Justice R V Easwar, has been asked to submit a preliminary report by January 31, just in time for incorporating suggestions that need legislative approval in the Budget for 2016-17.
The committee has been asked "to study and identify the provisions/phrases in the (Income Tax) Act which are leading to litigation due to different interpretations."
Indian Finance Minister Arun Jaitley said the main idea behind setting up the panel is to make the I-T Act more simple.
"We have over the last few months been resolving a lot of past issues and now time has come to look at some provisions of the I-T Act to look at how their drafting quality can be improved in order to avoid ambiguity so that everybody is certain as to what the Act itself says," he told reporters.
Also, the panel will study and identify the provisions which are impacting the ease of doing business as well as identify the areas and provisions of the Act for simplification in the light of existing jurisprudence.
The BJP government had previously used a similar panel headed by former Delhi High Court judge AP Shah to do away with retrospective applicability of minimum alternate tax (MAT) on profits made by FIIs and foreign portfolio investors.
Like MAT on FIIs, the other legacy issue facing the government is the Finance Bill 2012 that allowed government to impose tax on corporates on alleged gains made as early as 1962.
While it had criticised retrospective taxation of the previous UPA regime, the BJP government has so far not scrapped it even though it had decided not to use it. The continuing of such tax has been a major source of concern for foreign investors.
Foreign investors like Vodafone has dragged government to arbitration over a Rs 20,000 crore tax dispute arising out of retrospective applicability of the tax law. British oil explorer Cairn Energy plc has also initiated a similar move over Rs 10,247 crore tax liability due to same reason.