Simplified direct tax code to be tabled in monsoon sesson: Mukherjee

Finance minister Pranab Mukherjee today said the government would table a simplified direct tax code in the monsoon session of the Parliament to replace the 50-year-old maze of the Income Tax Act and free people from the clutches of chartered accountants.

"The draft is under revision, taking into consideration the areas of concern expressed by various stakeholders," Mukherjee told the annual conference of chief commissioners and directors general of income tax in New Delhi today.

"The discussion paper will be shortly in the public domain before introduction in Parliament in the forthcoming monsoon session. It will indeed be legislation for the 21st century, which will witness the emergence of an economically strong and vibrant India."

According to the minister, direct taxes now provided the major resource to the government and had grown at an average 24 per cent per annum in the past five years, trebling from Rs132,771 crore in 2004-05 to around Rs378,000 crore in the previous fiscal.

The share of such taxes had also risen from 4.1 per cent to 6.1 per cent of the gross domestic product (GDP), made possible through rationalisation of tax structure and improvement in administration that leading to better tax compliance.

Mukherjee said, "To improve compliance further, tax laws need to be simple, stable and robust. Tax rates should remain moderate. Multiplicity of tax exemptions and deductions must be gradually phased out in order to widen and deepen the tax base."