New Direct tax code by Finance Ministry to simplify and rationalise the tax

New Direct tax code by Finance Ministry to simplify and rationalize the tax

New Direct tax code by Finance Ministry to simplify and rationalise the tax is unveiled today by Finance minister Pranab Mukherjee. New Direct tax code aims to change the face of how direct taxes in the country will replace the current Income-tax Act that was enacted about 50 years ago in 1961. It would provide for tax calculators allowing taxpayers to calculate their own taxes, explain a tax provision in simple language.

Finance minister Pranab Mukherjee releaseed a draft of the code and a discussion paper in the presence of home minister and former finance minister P Chidambaram, who initiated work on it during his tenure.

Experts indicate that new code will simplify the rules making them transparent and easily understood by both the tax collector and the tax payer in this category.

The proposed tax code is also expected to include new measures to prevent abuse of some special bilateral taxation treaties between India and some nations. The double taxation avoidance treaty, as it is known in technical parlance, allows taxpayers to pay a tax on their income only in one of the two countries which have signed the agreement.