What should be done to simplify tax rates? See what Revenue Secretary said

While addressing the second TIOL National Taxation Awards 2021 and TIOL Tax Congress, Revenue Secretary Tarun Bajaj said that the new tax regime will not take over unless the old regime is  disincentivized and the new regime with no exemptions is incentivized. He further added that until this is done, tax rates cannot be simplified. 

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Bajaj enlightened the audience on the issue if tax slab as to the old vis-a-vis new tax regime. He observed and admitted that the government in 2015 has made an announcement that it wanted to simplify the law so as to lower the tax rates by removing exemptions. 

Bajaj pointer out that a couple of years ago, the corporate tax rates were reduced to 22 per cent from 30 per cent which was a major step taken towards the simplification of the tax laws. This may result in lesser litigations on the personal income tax. Similarly, last year, the Finance Ministry came up with a new tax regime/slab with no exemptions and lower tax rates, but it failed to pick up.

In 2012, the legislature came up a with a provision that would allow nonresident investments in foreign currency in India by giving them Tax Concession certificates. However, since the government and the political executive does not work in a vacuum, it has to respond to the demands that come at the time of the making of the budget.

He further elaborated that there is a double taxation avoidance agreement which has been entered into with more than 100 countries. As a matter of fact,  when it comes to BEPS, it cannot be said that there should exist a provision of no taxation in either of the countries.

While addressing the issue on capital gains tax, Bajaj said, "The first Income Tax Act I think came in 1860. If I'm not mistaken the next one came somewhere in the early 1900s. And the third one came in 1961. Perhaps this is the time that we should write the fourth one. Some attempts have been made in the past, and we have not succeeded in that. I think we need to make a sincere attempt now. And for that I seek assistance from all who say that there are certain provisions in this Act which should go away which grants unnecessary benefits to certain class of people."