Undeniably, the Direct Tax Code is a move in the right direction to simplify the tax provisions and enhance compliance. However, a few aspects of it should be reconsidered and necessary changes brought in to ensure that the DTC stands the test of time.

Change is the only constant. The tax policy and administration need to keep pace with the dynamics of the ever-changing business reality. The government has been contemplating the introduction of new direct tax legislation for the last few years, and finally a draft of the Direct Tax Code (DTC) has been placed for public inputs.

The thrust of the DTC is to improve the efficiency and equity of our tax system by eliminating distortions in the tax structure, introducing moderate levels of taxation and expanding the tax base. The underlying intent is to do away with the plethora of exemptions and deductions, which have not only made the existing tax law bulky and complicated, but are also one of the main reasons for disputes between the taxpayer and the tax collector, which ultimately results in prolonged litigation. Further, the aim of the DTC is also to simplify the language and the layout of the provisions for a common man to better understand his tax obligations.

Besides overall simplification, a few of the welcome steps under the DTC include reduction of the corporate tax rate to 25% from the existing 30% and substantial increase in the tax slab rates for the individual taxpayers.

The Analyst Magazine, Direct Tax Code, DTC, Tax Obligations, Minimum Alternative Tax, MAT, Double Taxation Avoidance Agreement, DTAA, General Anti-avoidance Rules, GARR, Special Economic Zone, SEZ, Double Taxation Avoidance Agreement, DTAA, Corporate Restructuring, Leave Travel Concession, Socio-Economic Parity.