In an indication that the Direct Taxes Code (DTC) may miss its April 2013 deadline, Finance Minister P Chidambaram, on Tuesday, said that DTC requires a fresh look, but expressed hope about getting India’s most important indirect tax reform, the Goods and Services Tax (GST) passed by this fiscal (2012-13) end.
“Can’t say about DTC, it has gone through various versions... I need time to look at DTC. I am only 28 days old in the ministry and it requires a fresh look,” Chidambaram said, after his brainstorming with senior tax officials.
DTC is India’s most ambitious direct tax reform, which seeks to replace the archaic Income Tax Act of 1961.
The government wants to rationalise and simplify the tax rates with the new tax code and also broaden the tax base. A miniscule over 3 per cent of India’s population files income tax returns and the government wants to improve collections by introducing this bill.
Analysts are of the view that the controversial provisions relating to retrospective tax amendments and General Anti-Avoidance Rule (GAAR), which are still under review, may take some time.
Chidambaram said, he was awaiting the Parthasarthy Shome Committee report, which is looking into concerns expressed by foreign and domestic investors.
But unlike GST, DTC cannot be introduced from the middle of the year and if it misses the April 2013 deadline, it will see the light of the day only when the next fiscal year begins.
On GST, the Finance Minister, however, said that after his meeting with Bihar Finance Minister Sushil Modi, who is also the Chairman of the Empowered Committee of State Finance Ministers on GST, he is hopeful of the bill getting passed by the end of fiscal 2012-13.
Chidambaram had recently met Modi and tried to understand the problems faced by the states in reaching a consensus on GST.
Implementation of GST, which will subsume most of the indirect taxes, has missed several deadlines.The GST will help put in place an effective and efficient tax system which is friendly and fair to the taxpayers.
Chidambaram also hoped that the indirect tax collection target of Rs 5,05,044 crore for this fiscal year will be met. He said buoyancy in tax collection can be seen after August.