Paying and calculating taxes might soon become a less cumbersome and jargon-free exercise with the government planning to introduce a new Income Tax Code.
“I propose to pursue structural changes in direct taxes by releasing the new Direct Taxes Code within the next 45 days and in indirect taxes by accelerating the process for the smooth introduction of the Goods and Services Tax (GST) with effect from 1st April, 2010,” finance minister Pranab Mukherjee said in his budget speech 2009-10.
The code along with a discussion paper will be released to the public for debate and a direct taxes code Bill will be introduced in Parliament in the Winter Session.
The code will make it easier for taxpayers and professionals to understand the tax rules and compute effective taxes.
Once introduced, the new code will replace nearly five-decade-old Income Tax Act 1961. A few other legislations, including the Wealth Tax Act, will be subsumed under it.
Interpreting the voluminous Income Tax Act, 1961 that has gone through several amendments has never been easy for common tax payers who are often forced to take professional help of chartered accountants.
The new code will simplify the rules and procedures with emphasis to make tax rules short, light, and easy to understand by removing redundant provisions and complex tax terminology.
The new code will be equipped with tax calculators and simple formulae for calculating taxes. These would help common individuals avoid the arduous task of referring to voluminous explanations for every clause and sub-clause of the Income Tax Act for computing effective taxes.
The new code would first be put in public domain for comments from stakeholders and then it would be placed before Parliament for approval.