The RV Easwar Committee on simplification of income tax laws has suggested amendments to allow for lower capital gains tax on annual earning of less than ₹5 lakh from share trading rather than treating it as a business income. Accordingly, it has suggested taxing the gains at 15 per cent and not 30 per cent. But it will be taxed as long-term capital gains if held for more than one year and shown as capital assets.
On the issue of disallowance under Section 14A, it has proposed that the dividends received after levy of dividend distribution as well as income from shares that have already been taxed at the firm’s hands will not be treated as exempt income and no expenditure will be disallowed on them.
It has proposed raising the TDS rate on winnings from lotteries, horse races and crossword puzzles to 30 per cent. However, one of the members of the 10-member committee raised concerns that lower TDS rates may impact revenue collections.
With a one-year time frame, the committee has said issues requiring deeper review will be dealt with in the next batch of recommendations and even the first report is not fully exhaustive in nature. In all, the report includes 27 suggestions for amendments to the Income Tax Act and eight for reform through administrative instructions.
Public comments have been sought till January 23, following which the committee will finalise the first part of the report by January 31.