Finance Minister Pranab Mukerhjee in the Budget has finally set the ball rolling for replacing the age-old Direct Tax code and has assured to come out with a white paper in the next 45 days.
It has been 47 long years that the Income tax act was first introduced in India and now time has come to further simplify it and make it leaner.
The Budget for the current financial year has sought elimination of exemptions and simplification of current IT laws. Besides, it seeks to have a low rate tax environment and emphasis on voluntary compliance. Tax Expert H P Ranina said, โThe government has appointed only internal Income Tax Commissioners for making this code. With maximum revenue collection being the sole criteria, as FM indicated, they would take away all the exemptions.โ The finance ministry mandarins are working over time to publish the new direct tax code as government largesse towards its public sector programmes demands a plug on all tax breaks.
The estimates point out that the government has to forgo almost Rs 4 lakh crore as revenue due to exemption last fiscal. It had to bear a revenue loss of Rs 39,553 crore due to various exemptions given to income tax assesses via housing loan and insurance schemes pension. The exemptions given to corporate sector stood at Rs 68,914 crore in FY 08-09.ย ย
N C Hegde, a partner at Delloitte Haskins and Sells, said, โThe new Direct Tax code exact contents will be known only after it is put out in public domain. But it will also give an opportunity for us to give our suggestions in making the processes simpler and transparent.
Meanwhile, the Direct Tax code has been in discussion for the past five years. But the latest 45 daysโ timeline has only increased the expectations and everyone hopes that this time the tax reforms finally see the light of the day and translate into legislation very soon.