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New income tax code to be tabled by December

The new income tax code that will simplify and replace the nearly five decades-old law will be introduced in Parliament

The new income tax code that will simplify and replace the nearly five decades-old law will be introduced in Parliament in the next four months amidst indications that there may be “fine tuning” of taxes but no “radical” changes in them.

Over the weekend, finance minister P Chidambaram has been working on drafting the code, which after being tabled in Parliament, will have to go through a process that will take quite some time before it is passed.

The finance minister says that the salaried class pays the maximum taxes and the honest tax-payer need not worry about any harassment. But the long wait for refunds will end once the refund banker system is extended throughout the country. “Yes, before the end of the calendar year we will introduce it in Parliament,” he said in an interview when asked if he was on course on enacting a new I-T code.

He said the code would begin from a zero base and would aim at simplification of the provisions of the income tax law. It would completely replace the IT Act of 1961, Chidambaram said adding he had worked over the last week-end on the subject. The history of income tax in modern India dates back to 1860, when the first Income Tax Act was introduced. After independence, based on Law Commission’s report, the present income tax law was enacted in September, 1961.

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On the subject of taxes touching low Asean levels, Chidambaram said for that the base must become wider and compliance must get better. Asked about his recent statement on lowering tax levels, he said, “All I said was if compliance improves and tax base gets wider, there is scope for reduction. And I added that we must always work on the premise that lower tax rates could nevertheless enhance revenues.”

Asked if tax-payers could expect something in the next budget, he said, “depends on what we find is the revenue picture in the first week of February.” To a question as how close the country was to the Asean levels of low taxes, Chidambaram said on customs the country was “more or less there”.

First published on: 08-08-2007 at 12:35:06 am
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