The government has proposed a dramatic makeover of the country’s 48-year tax law, bringing it on a par with the new economy and also with what prevails in the rest of the world.
The draft of a new direct tax code introduced by the finance ministry on Wednesday has suggested significant cuts in tax rates for individuals and companies, pruned exemptions, choked loopholes for foreign companies and radically changed definitions, all of which are likely to have a mixed impact on companies and individuals. Together with greater surveillance, it would ensure greater compliance and thereby reduce the risk of any loss in tax revenues due to a cut in rates.
“The underlying philosophy of the code is the philosophy of the government. (It is) wedded to a well-regulated free market system,” P. Chidambaram, current home minister who was involved in preparing the draft code earlier, said at a press conference called by finance minister Pranab Mukherjee to release the draft code. Mukherjee said he would strive to introduce the draft legislation in the winter session of Parliament.
Source: Livemint
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