The then Finance Minister, in his
Budget Speech - 2005, made an
announcement which reads as under: "In due course, I intend to
place before Parliament a revised and simplified Income Tax Bill." Pursuant to
this announcement, the Ministry of Finance came out with a draft of revised
legislation, named as Direct Tax Code (DTC) in August 2009 which was thrown
open for public comments. There was a wide debate on the proposals in public.
On the basis of comments received by the Ministry, a revised Discussion
Paper was issued by the Ministry on June 15, 2010 in which the government made
its position clear on 11 items. Most of the proposals in these items have
been withdrawn/relaxed. The DTC after incorporating the changes announced
in revised Discussion Paper will be a simplified version of existing law written
on a new slate with only a few structural changes.
A question is often raised about the need for having a new piece of tax
legislation. Though it may take some time to familiarize with the new law and
there may be some transitory disputes also, it is the need of the day to rewrite
the existing law in a more comprehensive and simplified manner even if no
major structural changes are to be made. The existing law which was enacted in
1961 by replacing the Income-Tax Act of 1922 has undergone vast changes over
the last 50 years. As a result of patchwork carried out from time to time, the
already complicated law became further complicated with a web of sections,
subsections, clauses, sub-clauses, cross references, explanations, provisos,
etc., and the Act has come in the shape that perhaps not even a tax professional
or any official of the Tax Department can readily point out as to what is
latest position of law on any particular issue without going meticulously through
and dissecting from the large number of provisions of the Act.
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