New Delhi, Aug 13 (ANI): Finance Minister Pranab Mukherjee has said that India proposes to reform its archaic tax laws, phase out exemptions, simplify rules on corporate mergers and help improve compliance.
"You will find all the direct tax laws, fringe benefit tax, income tax all these have been brought under one umbrella single direct tax code. Second feature is that the language is very simple. By putting in simple language and also putting in simple form it will eliminate the scope of litigation as far as possible," Mukherjee said after launching the draft Direct Taxes Code here on Wednesday.
"The government would try to bring a bill in the winter session of Parliament expected to start in November, with the proposed changes. The bill has to be debated in Parliament and get approved to become a law, which means it could be implemented from 2011," he added.
Complex laws and procedures have led to litigations, encouraged large-scale evasion and prevented the cash-strapped government to shore up revenues in a country of 1.1 billion-plus people.
Foreign investors often cite cumbersome tax laws as a deterrent in doing business in India, while only three percent of Indian citizens pay tax on their income.
The new direct tax code would be a vast improvement over the Income Tax Act 1961.
The new code proposes to cut tax rates to bring in more people and companies under the tax net, phase out profit-linked exemptions for companies and replace them with investment-linked incentives.
Business losses will be allowed to be carried forward indefinitely, while rules for capital gains and mergers and acquisitions will be rationalised, according to the draft plan.
The code proposed abolition of securities transaction tax, which is now levied on purchase of shares and bonds. (ANI)