Revenue Secretary Announces Revised Direct Tax Code Draft to be Ready in 6 Months

By: Admin
July 26, 2024
Categories: Income Tax News|News
4 Min Read

The Indian government is set to embark on a significant overhaul of the Direct Tax Code (DTC) in the coming months. According to Sanjay Malhotra, Secretary Revenue at the Ministry of Finance, a thorough review of the Direct Tax Code will be conducted by an internal committee, with a draft expected to be shared for stakeholder consultation within the next six months. This announcement underscores the Centre’s commitment to refining the income tax framework to enhance clarity and efficiency.

Purpose of the Review

The comprehensive review aims to address the current complexities of the Income-tax Act, 1961, and streamline the tax system. This initiative was highlighted by Finance Minister Nirmala Sitharaman in her recent Budget statement. The primary goal is to make the Act more concise, readable, and easier to understand, ultimately reducing disputes and litigation. Sitharaman emphasized that the revision will help in providing greater tax certainty to taxpayers and diminish the demand burden associated with legal disputes.

Key Aspects of the Review

Draft Preparation and Stakeholder Consultation: The review process will be spearheaded by an internal committee. After the draft of the revised Direct Tax Code is prepared, it will be shared with stakeholders for their input. This collaborative approach is intended to gather diverse perspectives and ensure that the final code is comprehensive and practical.
Not a New Direct Tax Code: It is important to note that this exercise is not aimed at introducing a new Direct Tax Code but rather at comprehensively reviewing the existing income tax law. The focus will be on making necessary adjustments to improve clarity and functionality without overhauling the entire system.
Simplification and Rationalization: Finance Minister Sitharaman’s announcement also included plans to introduce a standard operating procedure for defaults related to Tax Deducted at Source (TDS). Additionally, there will be efforts to simplify and rationalize the process for compounding such offences. These measures are expected to enhance compliance and reduce administrative burdens.

The Centre’s Collaborative Approach

Sanjay Malhotra reiterated that the Centre’s approach towards taxation will remain collaborative rather than confrontational. The aim is to implement tax policies in a manner that is respectful and trustworthy, ensuring a smooth and hassle-free experience for taxpayers. The focus will be on efficient tax collection while maintaining a positive relationship with the tax-paying public.

Malhotra emphasized that the review is part of a broader strategy to provide a more streamlined, user-friendly tax system. The proposed changes are expected to facilitate better tax administration and compliance, aligning with the government’s objective of reducing litigation and disputes.

What to Expect Moving Forward

As the Centre progresses with the review of the Direct Tax Code, stakeholders can expect a series of consultations and discussions to refine the proposed changes. The internal committee’s draft will be critical in shaping the future of tax legislation in India. Stakeholders, including businesses, tax professionals, and other relevant parties, will have the opportunity to provide feedback, ensuring that the revised code addresses practical concerns and enhances the overall tax environment.

Conclusion

The Centre’s initiative to review and revise the Direct Tax Code represents a significant step towards modernizing India’s tax system. By focusing on simplification and clarity, the government aims to make the tax framework more accessible and less prone to disputes. The collaborative approach and stakeholder involvement are key aspects of this process, reflecting a commitment to creating a tax system that is both effective and respectful of taxpayer needs.

Stay tuned for further updates on the draft and consultation process. For more information on the Direct Tax Code and related developments, follow us for the latest news and insights.