The implementation of the Direct Taxes Code appears set to miss its deadline once again.
The Direct Taxes Code (DTC) Bill, introduced in Parliament on August 30 last year, proposes to replace the 50-year-old Income Tax Act.
Initially proposed to come into force from April 2011, the code’s deadline had been extended to April 2012 as the draft Bill was referred to a Parliamentary standing committee.
The standing committee is unlikely to give its report on the draft Bill in the ongoing session.
Though a standing committee member said the government could implement the DTC from April 2012 even if the panel’s report was presented in the Winter session, a senior finance ministry official handling the process told Business Standard it would be very difficult.
“There won’t be enough time. The Act needs to be passed by March 31 for implementation from April 1. If the standing committee report comes in the Winter session, the final Bill can at best be tabled in Parliament in the Budget session and it would not be possible to announce the implementation from the next financial year in the Budget without the Act's passage,” explained the official.
The new direct tax law proposed to simplify and streamline the income tax regime. After it missed the April 2011 deadline, Finance Minister Pranab Mukherjee had shown optimism it would be implemented from April 2012. The official, however, said the delay in implementation by another year would not create problems, as the government had started the process of moving towards the DTC under the existing income tax provisions in the last two years.
“Ideally, after the passage in Parliament, both the income tax department and industry should get at least nine months to prepare themselves to handle the new framework,” he added.
The industry, in fact, has indicated to the finance ministry it would be good to implement the DTC from April 2013 along with the proposed goods and services taxation (GST).
"The industry wants certainty and time to understand the exact implications of a particular law to settle down before getting into a new policy framework," said the official.
The Central Board of Direct Taxes has started working out the systemic requirements to handle the DTC and implementation of the code from April 2013 will give it extra time to develop the infrastructure.
The annual I-T exemption limit is proposed at Rs 2 lakh in the DTC Bill compared to Rs 1.8 lakh at present.
Under the Bill, the government proposes to widen tax slabs to levy 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-Rs 10 lakh and 30 per cent above Rs 10 lakh.
Currently, income up to Rs 1.8 lakh per annum is exempt from tax for individuals. For women and senior citizens, the limit is Rs 1.9 lakh and Rs 2.5 lakh, respectively.
Tax is levied at a 10 per cent rate on income between Rs 1.8 lakh and Rs 5 lakh, 20 per cent on Rs 5-Rs 8 lakh and 30 per cent above Rs 8 lakh.
Source: Business Standard
The Direct Taxes Code (DTC) Bill, introduced in Parliament on August 30 last year, proposes to replace the 50-year-old Income Tax Act.
Initially proposed to come into force from April 2011, the code’s deadline had been extended to April 2012 as the draft Bill was referred to a Parliamentary standing committee.
The standing committee is unlikely to give its report on the draft Bill in the ongoing session.
Though a standing committee member said the government could implement the DTC from April 2012 even if the panel’s report was presented in the Winter session, a senior finance ministry official handling the process told Business Standard it would be very difficult.
“There won’t be enough time. The Act needs to be passed by March 31 for implementation from April 1. If the standing committee report comes in the Winter session, the final Bill can at best be tabled in Parliament in the Budget session and it would not be possible to announce the implementation from the next financial year in the Budget without the Act's passage,” explained the official.
The new direct tax law proposed to simplify and streamline the income tax regime. After it missed the April 2011 deadline, Finance Minister Pranab Mukherjee had shown optimism it would be implemented from April 2012. The official, however, said the delay in implementation by another year would not create problems, as the government had started the process of moving towards the DTC under the existing income tax provisions in the last two years.
“Ideally, after the passage in Parliament, both the income tax department and industry should get at least nine months to prepare themselves to handle the new framework,” he added.
The industry, in fact, has indicated to the finance ministry it would be good to implement the DTC from April 2013 along with the proposed goods and services taxation (GST).
"The industry wants certainty and time to understand the exact implications of a particular law to settle down before getting into a new policy framework," said the official.
The Central Board of Direct Taxes has started working out the systemic requirements to handle the DTC and implementation of the code from April 2013 will give it extra time to develop the infrastructure.
The annual I-T exemption limit is proposed at Rs 2 lakh in the DTC Bill compared to Rs 1.8 lakh at present.
Under the Bill, the government proposes to widen tax slabs to levy 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-Rs 10 lakh and 30 per cent above Rs 10 lakh.
Currently, income up to Rs 1.8 lakh per annum is exempt from tax for individuals. For women and senior citizens, the limit is Rs 1.9 lakh and Rs 2.5 lakh, respectively.
Tax is levied at a 10 per cent rate on income between Rs 1.8 lakh and Rs 5 lakh, 20 per cent on Rs 5-Rs 8 lakh and 30 per cent above Rs 8 lakh.
Source: Business Standard
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