New Government Panel recommends relief measures for middle class and corporate

An Indian Governmental Panel was tasked with overhauling the 60-year old Income Tax Act has given several recommendations which can bring significant relief to the taxpayers and the corporates of India.

What was the Panel about?

• The Indian Government had formed a panel on financial reforms which was headed by the Central Board of Direct Taxes (CBDT) member Akhilesh Ranjan to explore measures and solutions for providing financial relief to the stressed middle class and corporates of India.
• The panel has recommended a significant relief for all taxpayers with changes in the personal tax slabs which would benefit both the upper and middle-class Indian families.
• The panel has also recommended a flat 25% corporate tax rate for both the Indian and Foreign companies in India.
• The draft code has also proposed new incentives for startups to accelerate their growth.
• The draft code has also established a new concept with which to settle disputes via mediation between the taxpayer and collegiums of officers instead of the lengthy court procedure.

What happens currently?

• All foreign companies in India are charged a flat 40% corporate tax as they don’t have to pay the dividend distribution tax which is applicable to the companies which distribute the dividend to the shareholders in this country.
• Domestic companies in India pay a varying tax of 25% or 30% depending on their size.

What will happen if the committee’s recommendations are implemented?

If implemented, the recommendations will provide a big fiscal stimulus for the corporate sector of the nation. These committees recommendations will help stimulate the economy and provide more incentives for economic growth.