The task force to overhaul the nearly 60-year-old Income Tax Act has recommended abolishing the dividend distribution tax (DDT). It is learnt that the panel has suggested imposing tax on the person receiving dividends.
The committee on IT Act reforms also suggested retaining the long-term capital gains (LTCG) tax and the securities transaction tax (STT). The proposed move to withdraw the DDT would help encourage investments by addressing multiple taxation of income and bringing down the effective tax rate on companies, which is among the highest in the world, the sources said.
The eight-member panel on the direct taxes code (DTC), which submitted its report to Finance Minister Nirmala Sitharaman last week, has proposed to rationalize the highest tax slabs of 20 per cent and 30 per cent to improve compliance.
The panel, led by Central Board of Direct Taxes Member Akhilesh Ranjan, is learnt to have taken a view that no preferential treatment must be given to any class of investors.