Taxpayers may get relief in terms of tax rates in the proposed Direct Taxes Code,which is likely to replace the 50-year-old Income Tax Act from the next fiscal,a key official indicated on Friday.
We are in the process of reducing the rate of tax and DTC will be a good example in that direction,Central Board of Direct Taxes (CBDT) Chairman S S N Moorthy said.
He further said: India is coming down to a realistic platform where the rates will be almost in line with international standards. We are in the process whereby we have to be taxpayer friendly,we have to be in tune with international standards.
At the same time,the government would take measures so that the flight of revenue from India can be checked.
The DTC bill is likely to be tabled in this session of Parliament so that it could replace the archaic Income Tax Act from April 1,2011.
In the first DTC draft,the government had proposed a substantial widening of the tax base. It had suggested imposing 10 per cent tax on income of Rs 1.6 lakh-Rs 10 lakh,20 per cent on income of Rs 10 lakh-25 lakh and 30 per cent beyond Rs 25 lakh in a year.
The proposed tax slabs were even substantially wider than the increase in the Budget 2010-11. The Budget imposed 10 per cent tax on income of Rs 1.6 lakh-5 lakh,20 per cent on Rs 5 lakh-8 lakh and 30 per cent on over Rs 8 lakh in a year.
However,the revised draft on DTC did not talk over tax rates and Finance Ministry officials said the slabs given in the first draft were just illustrative.
The second draft also said that the rates proposed in the first draft could be calibrated,after it dropped contentious proposal of taxing long-term savings like provident funds at the time of withdrawal. This means that tax rates may not be moderated so sharply,as was given in the first draft,but some rate cuts would be there.
Moorthy further said that direct tax collections of Rs 4.3 lakh crore for the current fiscal are on track.
The target for the current year is about Rs 4.30 lakh crore. Fortunately we are on track. We are growing at the rate of 15 per cent,he added.
He further said tax deduction at source collection,which constitute a major chunk of direct tax,is not adequate but it would pick up. This year we are going at the (TDS) rate of about 37.5 per cent which is not adequate enough but anyways it will pick up.
Last year,TDS collection touched around 38 per cent of the total revenue. It was about Rs 1.40 lakh crore.