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Sunday, August 16, 2009

Draft Direct Tax Code

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The code will replace the existing Income Tax Act, which was enacted in 1961 and would subsume the direct tax legislations.
Reasons to make it Unique:
First, in naming it the direct tax code and not the Income-tax (I-T) Act, perhaps the government is attempting to send a signal.By naming the new legislation a “code” rather than an Act, the government appears to be giving a signal that in the future sensing it as a good signal.
Second, there has been a conscious effort to do away with exemptions—so that effective rates of taxation reflect the charges on incomes that are transparently defined.a major shift away from area-based exemptions, from choosing winners and losers in industry and, indeed, in removing distortions that have crept in the way of “development initiative
Third, there is considerable relief for individuals,calling it the direct tax code rather than the I-T legislation, there is an attempt to bring some of the newer tariffs such as the fringe benefit tax and the securities transaction tax into the legislation.

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