New Delhi: The Cabinet is likely to take up the Direct Tax Code (DTC) Bill, at simplifying rules and structure of income tax from next fiscal, on Thursday.
A proposal is before the Union Cabinet for consideration and after its approval the bill will be tabled in this session of Parliament, a source told a newswire.
If introduced in the Monsoon Session that ends on August 31, the DTC Bill will be referred to a Parliamentary Standing Committee on finance and may be passed during the Winter Session to make the reforms effective from the deadline --April 1, next year.
Yesterday, Revenue Secretary Sunil Mitra said that he expects the Bill to be introduced in Parliament in the ongoing Monsoon Session.
"We do expect the DTC to be introduced in Parliament in this session," Mitra had said.
Finance Minister Pranab Mukherjee in his Budget speech had indicated the Centre`s intention to bring DTC, which will rationalise tax rates to improve collections, into effect from April 1, 2011.
A draft of the DTC was released in August last year and a revised draft in June this year for comments from the industry and other stakeholders.
DTC aims at reducing tax rates, but expanding the tax base by minimising exemptions.
Recently, Central Board of Direct Taxes Chairman SSN Moorthy indicated that taxpayers may get relief in terms of tax rates in the proposed Direct Taxes Code.
"We are in the process of reducing the rate of tax and DTC will be a good example in that direction," Moorthy had said.
In the first DTC draft, the government had proposed a substantial widening of the tax base. It had suggested imposing 10 percent tax on income of Rs 1.6 lakh-Rs 10 lakh, 20 percent on income of Rs 10 lakh-25 lakh and 30 percent beyond Rs 25 lakh in a year.
The proposed tax slabs were even substantially wider than the increase in the Budget 2010-11. The Budget imposed 10 percent tax on income of Rs 1.6 lakh-5 lakh, 20 percent on Rs 5 lakh-8 lakh and 30 percent on over Rs 8 lakh in a year.
However, the revised draft on DTC did not talk about tax rates and Finance Ministry officials said the slabs given in the first draft were just illustrative.
The second draft also said that the rates proposed in the first draft could be calibrated, after dropping a contentious proposal for taxing long-term savings like provident funds at the time of withdrawal.