New Delhi, Oct 9: Finance minister Pranab Mukherjee announced that the proposed direct tax law would be functional from 2011.
The new direct tax law would cut the corporate tax rate to 25 percent, phase out exemptions and simplify rules on mergers.
This new code would replace the 1961 Income Tax and other direct tax laws.
Earlier, the finance minister said that the new code would provide a simple structure for capital gains tax, savings instruments and non-profit organisations thus limiting scope for litigation.
"We expect to have better compliance and better collection of taxes," Mukherjee had said.