In the budget session 2022, the Finance Bill and the Appropriation Bill are being discussed in the Parliament. The aim of the government is to remove unnecessary provisions from the country’s tax system through these bills. During this, former Finance Minister of the country, P Chidambaram, asking the question to Finance Minister Nirmala Sitharaman, said that what is the need of 39 amendments in the Finance Bill and the new Direct Tax Code (Direct Tax Code) in place of Income Tax Act 1961. asked to bring Let us know what is the Direct Tax Code?
Under the Direct Taxes Code, the government aims to simplify the tax system by making all the direct tax laws existing in the country a single law. Under this, a new tax system will be implemented by removing the Income Tax Act 1961 and other Direct Tax Acts. The Direct Taxes Code was drafted for the first time by the Congress government on 12 August 2009. After which in 2010 the draft was amended and brought to the Parliament. Then the government had constituted a standing committee to discuss it with various stakeholders.
The committee submitted its report to the Parliament in 2012. And in 2014 a revised version of the Direct Taxes Code was released. However, the bill could not be passed in Parliament when the NDA government came to power that year.
Progress in Modi Government: Prime Minister Narendra Modi-led government set up an expert committee in 2017 to draft a new direct tax code. The Task Force on Direct Taxes Code submitted its report to Finance Minister Nirmala Sitharaman on August 19, 2019. As of now, this report has not been made public.
According to a report by Business Standard, those earning up to Rs 55 lakh can get a big relief under the Direct Taxes Code. Incentive money can also be announced to promote startups, while it will have less provisions than the Income Tax Act.
P Chidambaram said in Parliament that it happens year after year. We have to stop it. The entire Income Tax Act should be replaced by a Direct Tax Code. When we were in government, I helped draft it. At that time there were three versions of the Direct Taxes Code, many of the provisions are now obsolete. I want to ask the government to immediately bring a new Direct Taxes Code by adding new provisions to it.