Income tax code overhauled: Chidambaram
The FM says the draft of income tax code that seeks to simplify procedures and make taxation aspects easier to understand is ready and will be released along with a discussion paper, reports Gaurav Choudhury.Updated: Jan 01, 2008 22:52 IST
The draft of income tax code that seeks to simplify procedures and make taxation aspects easier to understand is ready and will be released along with a discussion paper, Finance Minister P Chidambaram said on Tuesday.
"The income tax code is ready as of yesterday. The code is ready. But I am not in a position to release the code because I have decided that I will release it along with a discussion paper," Chidambaram said.
The discussion paper will explain the reasons for writing the code, what are the changes from the old law and the rationale for these changes, he said.
The new code proposes to replace the existing explanations with easily comprehensible mathematical formulae to calculate taxes. The direct tax code is also expected to provide comprehensive definitions for all complicated taxation-related terminology.
"The draft of the discussion paper that was shown to me is 70 pages long, I am trying to compress it to about 50-60 pages. I have cleared only 25 pages of that," he said.
The draft code will be put in the public domain for discussion before it is finalised and implemented. This may take about two years' time, he said.
"I am not taking IT Act and amending it. I am writing a new code, based on very different assumptions, very different postulates, very different outlook to direct taxes," the finance minister said.
Chidambaram also evaded a direct reply on whether a moderation in direct tax rates were expected in the coming budget. "If voluntary compliance (in taxes) increases there is a case for moderation. That does not mean the case has been accepted," he said.
During April-December, direct tax collections crossed Rs 2,05,000 crore, paving the way for direct tax collections to exceed indirect tax collections for the first time. Corporate tax collections grew 39.84 per cent to Rs 1,27,683 crore.