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Tax panel likely to keep rates steady; simplify laws

The task force on Direct Tax reforms, which will submit its report to Finance Minister Jaswant Singh on Friday, is unlikely to tinker with tax rates but come out with far-reaching measures to simplify laws in layman's language and link sops to performance for corporates.

The task force headed by Vijay Kelkar, advisor to the finance minister, is likely to retain the present personal Income Tax rate structure but may recommend raising of limits, official sources said in New Delhi on Thursday.

The three income tax slabs -- 10, 20 and 30 per cent, have been kept unchanged in the last two budgets and are unlikely to be touched upon by the Kelkar panel.

This is for maintaining stability and continuity in the Income Tax rate structure, sources said.

However, the exemption limit may be pegged up considering the changes in cost of living and other factors. Currently, persons having income of less than Rs 50,000 annually are exempted from Income Tax.

The panel may also recommend lifting of most of the exemptions under Income Tax Act, the sources added.

Moreover, Kelkar panel may suggest simplifying the tax laws so as to ensure that it is easily understood.

Modernisation of tax offices and simplification of procedures to reduce the interface of assessees and taxmen, may also be a part of the report.

In case of corporate tax, the panel may suggest offering some incentives, especially in areas of depreciation, to companies, which have utilised their assets efficiently and committed investments for productive purposes, sources said.

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