The task force constituted by the government to draft a new direct tax code submitted its report to finance minister Nirmala Sitharaman on Monday.

The code is expected to provide some relief to individual and corporate tax payers.

The finance ministry in a tweet said, “Finance minister Nirmala Sitharaman received the report submitted by Akhilesh Ranjan, convenor of the task force in New Delhi on Monday.”

The details of the report have not been made public.

Sources said the task force has favoured a cut in the personal income tax rates. Besides, minimum alternate tax (MAT) and dividend distribution tax (DDT) may be abolished, while surcharges are likely to be a temporary measure.

The report is likely to prepare a road map to gradually reduce the corporate tax rate.

“The finance minister was pleased to accept our report. The government will put it in public domain. A full-fledged report in two volumes has been given. After deliberations over 21 months, there was a unanimous decision on the entire code,” Mukesh Patel, tax advocate and member of the panel, said.

“Progressive” taxes

The new direct tax code is expected to have made personal income tax rates more “progressive” by giving relief to people within the slabs.

The code aims to reform the complex income tax laws into simpler rules, with reduced rates, fewer exemptions and tax slabs.

The panel has forecast a higher revenue mop-up over the next 7 to 8 years following the implementation of the recommendations.

It wants the implementation to start from 2021-22 as it would give the finance ministry adequate time to hold public consultations and develop a legal framework.

The panel has also submitted a draft income tax bill, which will help the government to implement the direct tax law.

Amrish Shah, partner at Deloitte India, said: “Abolishing the dividend distribution tax and reverting to taxing dividend income in the hands of shareholders — a concessional tax rate of 5-7 per cent — could incentivise foreign investment in India.

“So will abolishing minimum alternate tax (MAT) as nearly all tax incentives will be eventually phased out.”

The task force was supposed to submit its report by May 31. It was granted an extension of two months to complete the exercise. Subsequently, the government allowed the task force to submit its report by August 16, 2019, after the new members of the panel sought more time.

In November last year, the finance ministry had appointed Akhilesh Ranjan, member (legislation), CBDT, as the convenor of the task force after the retirement of Arbind Modi.

Other members of the task force include Girish Ahuja (chartered accountant), Rajiv Memani (chairman and regional managing partner of EY), Mukesh Patel (practicing tax advocate), Mansi Kedia (consultant, Icrier) and G.C. Srivastava (retired IRS and Advocate).