The much awaited Direct Tax Code, expected to have far reaching consequences on the income tax laws of the country, will finally be tabled in Parliament in monsoon session.
The Bill, which seeks to replace the existing Indian Income Tax Act 1961, intends to cut tax rates to bring more people and companies under the tax net. It also seeks to phase out profit-linked exemptions for companies and replace them with investment-linked incentives. Moving the Finance Bill 2012 in the Rajya Sabha, on Tuesday, Finance Minister Pranab Mukherjee said the DTC bill will be brought for approval of both the Houses in the next monsoon session.
He also assured the House that most of the standing committee recommendations on the DTC bill be accepted.
Mukherjee said that he could not go through all the recommendations the standing committee as the report was given only a few days ahead of the Finance Bill which was presented on March 16.
“I will have the opportunity after the Budget session is over, to go through all the recommendations and thereafter approval of the Cabinet, in the next monsoon session bring the DTC bill for approval of both the Houses,” the finance minister said.
Some DTC proposals on personal tax, however, have been announced in the Budget 2012. For example, the basic exemption threshold in the income tax has been increased to Rs 2 lakh for individuals below 60 years. This eliminates the preferential slab to women and sets the peak rate at 30 per cent for income exceeding Rs 10 lakh – a provision in sync with the DTC proposal. Other standing committee recommendations like dropping the age for senior citizens from 65 to 60, have also been taken care of, albeit for specific claims like medical etc, in the Budget for this year.
Analysts said the introduction and passage of the DTC Bill in monsoon session will mean, the law can come to force from April one, 2013.
Unlike the Goods and Services Tax, the DTC can come only from April 1, of any year. “The only possible date is April 1, 2013, given it is introduced in the monsoon session,” Mahesh C Purohit, Director at Foundation for Public Economics and Policy Research, said.
