Finance Minister Pranab Mukherjee is trying to keep the common tax payer happy and in doing so it is the corporate world which might have to bear the tab.
NDTV Profit has learnt that in the run up to the revised version of the Direct Tax Code, the finance ministry is in favour of retaining the current tax rates at the 10 per cent, 20 per cent and 30 per cent rates.
Finance ministry says these rates are fairly reasonable. Instead, all corporate income tax exemptions need to be axed.
For instance, during 2008-09, the government estimated a revenue loss of close to Rs 69,000 crore from over 30 types of corporate tax exemptions alone.
While on the other hand, income tax slabs are likely to be widened considerably benefiting a large number of personal income tax payees.
There is also a possibility of some of the personal income tax exemptions continuing. The major revenue loss on personal income tax is on account of the 80C tax savings basket. The government forego over Rs 27,000 crore in 08-09.
This year's tax bracket relaxation has cost the government another Rs 26,000 crore in revenues. But despite these numbers, Pranab Mukherjee is in favour of promoting the small taxpayer.
The finance minister has indicated the discussion paper on the revised direct tax code should be ready before the monsoon session of the parliament. So, that by August, the indian parliament is able to begin its deliberations.