"IT for IT, is the mantra: Information technology for income tax administration. The use of AI to make the system foolproof of manual interference and leakages has been envisioned," said a person in the know, on condition of anonymity. According to sources, the tax panel has recommended reduction in corporation tax rate to 25% for all companies, including foreign companies, in addition to relief for middle class individual taxpayers in terms of liberalised tax rates. "These measures would build a tax system with inherent checks and balances which would be very difficult to evade," said the person quoted above.
"It would be like a CCTV at a traffic signal. Once it's in place, a car driver would dare not jump the red light," he added.
Anther person in the know said it would probably take more than a year for the Bill to see the light of the day in Parliament, and its transformation into a law to replace the Income Tax Act, 1961.
The former panel headed by Arbind Modi is learnt to have recommended a sharp cut in corporation tax rate to 15 per cent, but with an assumption that compliance would improve 0.8 per cent with every percentage point of reduction in corporation tax rate.
It had also proposed a change in source rule, which would have increased the tax incidence for international companies having “significant economic presence” in India. It is unknown whether the final report has these proposals.