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Journalism of Courage
The Direct Tax Code DTC was envisioned as the replacement of a relic called the Income Tax Act and a simplification of Indias direct tax regime. Even if this revised DTC comes into effect next April,from the looks of it,its keeping things very simple indeed. Whats the point of so little,after so much effort? Individual income taxpayers will be relieved at the raising of the exemption limit to Rs 2 lakh per annum and industry rejoice at the minimum alternate tax MAT being shifted from gross assets to book profits reversing the DTC drafts proposal as also at the fact that corporate tax,while continuing at the current 30 per cent,will exclude surcharge and cess on taxes. While that falls short of the drafts proposal of 25 per cent,minus surcharge and cess,the total falls from an actual corporate rate of approximately 34 per cent.
But the story of this edition of the DTC is one of opportunity missed. There will be no cleaning up of the exemptions that add up to four-fifths of total tax collection. The logic of the erasure of exemptions would have lowered effective tax rates. However,after the revising of the draft into the DTC cleared by the Union cabinet,its obvious that not much has been done. In fact,corporate tax hovering around the old 30 per cent mark implies continuing concessions,which will,as always,be readily available for abuse.
Of course,tax rates,included in the bills schedule,neednt be changed annually any more. Yet,the fact that tax rates and slabs will remain more or less where they are right now is one sure sign of little movement and precious little being achieved. At any rate,the exemption regime will continue.
