Government proposes new draft on Direct Tax Code
Thursday, 13 August 2009, 14:45 IST   |    1 Comments
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New Delhi: Finance Minister Pranab Mukherjee Wednesday unveiled a draft of the new Direct Tax Code to replace the five-decade-old Income Tax Act with easy-to-comprehend provisions for average taxpayers, freeing them from the clutches of lawyers and experts. The finance minister also placed on the ministry's website a discussion paper on the subject to invite opinion from the public before going to parliament with a proper bill for the legislative changes. The code also proposes to bring under one umbrella provisions related to all aspects of direct taxes in the country, including corporate tax, personal income tax, fringe benefit tax and securities transaction tax. "The language is very, very simple. By putting simple language and simple forms, we will eliminate litigations as far as possible," Mukherjee told reporters here. He said it would be possible for most taxpayers to file their returns easily, adding that there were several easy to comprehend illustrations to guide them through the entire process, which today is often seen as complex and confusing. "I expect people will read it, there would be an informed debate. Of course, we will hold detailed discussions with large numbers of stakeholders." Mukherjee hoped to place the bill on the new code in parliament during the winter session and expressed optimism that it will become law by 2011, coinciding with the 50th year of the existing Income Tax Act. Home Minister P. Chidambaram, who had initiated the Direct Tax Code in 2005 as finance minister in the previous United Progressive Alliance (UPA) government, said the changes were necessary in view of the previous code outliving its utility. "In these 48 years, not only India has changed, the world has changed. Therefore, it is widely accepted that the present code is outdated," Chidambaram said, adding: "It became a happy hunting ground for lawyers." He said it was not a mere amendment of the Income Tax Act of 1961 but a brand new code that has been written from scratch. "This will be a transformational law." People should not get perturbed by the large number of pages in the new draft, which runs into 256 pages, Chidambaram said, explaining that the direct tax code of the US ran into 2,000 pages. The following are some salient features pertaining to the new Direct Tax Code proposed by the government: What does it seek: The Direct Tax Code will replace the existing Income Tax Act that was enacted in 1961, which had replaced an earlier legislation of 1922 enacted prior to the country's independence. When will it be introduced: The government intends to present the relevant bill during the winter session of parliament, after considering and incorporating, if seen fit, the opinions on its provisions from the public. The government hopes it will become law in 2011. The main purpose: The new code will completely overhaul and simplify the existing tax proposals for not only individual tax payers, but also corporate houses and foreign residents. How will it help: The idea is to keep the provisions simple so that even an average taxpayer can understand the language, than having to go to chartered accountants and income tax practitioners. It will also introduce the concept of tax calculators. Administrative reforms: The new code will also recast the powers of the Central Board of Direct Taxes, induce more transparency in decision-making and tune it to tax boards of countries like the US, Canada and Britain. What can the public do: The finance ministry has uploaded on its website - www.finmin.nic.in - the draft direct tax code, a discussion paper, a comment on the code and what rating people would like to give to it.
Source: IANS
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