As per the expectations the DTC will replace the Income Tax Act which is more than 50 years old. While tabling it in the parliament the Hon. Finance Minister has announced that DTC will be effective from 1st. April 2012. What will be the actual situation will only be revealed on presentation of Union Budget by the FM on 16th March 2012.
Besides, much talked change in rate of Taxes, the DTC, when introduced, will affect the basic structure of the direct Taxation in the country. The Finance Minister has enumerated the following objectives while introducing the concept of the DTC at Basic stage:-
1. Eliminate the distortion in the tax structure
2. Introduce the Moderate level of Taxation
3. Expand the Tax base
4. Improve the Tax compliance
5. Simplifying the Language
6. Lower the Tax Litigation
Budget speech -2010
I am happy to inform the Honourable Members that the process for building a simple tax system with minimum exemptions and low rates designed to promote voluntary compliance, is now nearing completion. On the Direct Tax Code the wide-ranging discussions with stakeholders have been concluded. I am confident that the Government will be in a position to implement the Direct Tax Code from April 1, 2011.
Budget speech -2011
As Hon'ble Members are aware, the Direct Taxes Code Bill was introduced in Parliament in August, 2010. After receiving the report of the Standing Committee, we shall be able to finalise the Code for its enactment during 2011-12. This has been a pioneering effort in participative legislation. The Code is proposed to be effective from April 1, 2012 to allow taxpayers, practitioners and administrators to fully understand the legislation and adjust to the revised procedures.
Now it is the basic question to see that how the replacement of Income Tax Act by DTC will affect the basic structure of the direct taxation in India. The changes of whole direct tax scenario for better will depend on the fact how honestly the provisions for simplification are introduced. It is well known fact that whenever the lawmakers introduced anything new in the name of simplification and rationalization, it has resulted in hardship to the taxpayers.
Simply the Government will not make sweeping changes in the tax rates that will make the big dent in the revenue both in case of individual and corporate sector especially because the Goods and service Tax is not coming on 1st. April 2012 to compensate the revenue loss hence we cannot expect a big relief from the Government in terms of tax benefits or tax rates but at least we can accept from the law makers that they will honestly and seriously make a way for simplified law of taxation which can easily be understood and apply to minimize the confusion and litigation.
UNION BUDGET DATE - 16TH MARCH 2012
BY CA SUDHIR HALAKHANDI
CAclubindia
