The code aims to simplify tax law by bringing down the rates and bringing together more firms and people under the tax net.
“Tax reforms, though gradual, have been systemic in scope, particularly when we consider the proposals currently awaiting implementation. The reforms have covered both the direct taxes as well as the indirect taxes," said Mukherjee at the 4th International Tax Dialogue Global Conference.
The government, in a bid to reform the direct tax system will replace the Income Tax Act, 1961, with a new legislation-Direct Tax Code.
The government's plan in the pipeline also includes reforming the indirect tax system and introducing the goods and services tax (GST), which will bring consistency in the tax structure across the country.
Talking about the current progressive personal income tax system, the Finance Minister said the main intention was to bring down inequalities in the society.
He said in the last 14 years, direct tax revenue had increased ten-fold from $8.62 billion in 1996-97 to $87 billion in 2010-11.
“More importantly, the composition of our tax revenues has altered significantly in favour of direct taxes, which now account for nearly 60 per cent of our total tax revenues. We have tried to address the issue of gender inequality and old age vulnerabilities by providing some tax relief to women and old people," he said.
Pranab Mukherjee also called for international co-operation to deal with the issues of tax evasion and black money.
“The opacity of the tax systems in some of the jurisdictions is adding to the challenges. There has been some movement on these issues in response to the initiative by the G-20. We need to pursue this to its logical end," Mukherjee said.
“Tax evasion undermines the intended benefits of a progressive tax policy," the minister said.