A parliamentary panel has asked the government to not abandon the Direct Taxes Code (DTC) saying this new law needs to be enacted to replace the existing Income Tax Act which was "very cumbersome" and prone to avoidable litigation.

"The government should go ahead with the DTC with its good provisions and implement the same within a stipulated deadline along the lines of the GST regime," the Standing Committee on Finance said in its report, which was tabled in Parliament on Friday.

Headed by M Veerappa Moily, the committee said it is not convinced with the government's logic that there was "no great merit" in going ahead with the DTC as most of its provisions were incorporated in the present Income -Tax Act.

The report said that the existing I-T Act "is considered a very cumbersome statute, fraught with complexities and several ambiguities prone to capricious interpretation and avoidable litigation."

The direct taxes code was drafted by the previous UPA government.

The committee also underlined the need for preparing a time-bound plan to realise the tax arrears which are not disputed and can be collected.

It also suggested that officials should be held accountable for failure to collect undisputed tax arrears.

The quantum of undisputed or uncollected arrears in direct taxes in 2012-13 was Rs 1.07 lakh crore, which rose to Rs 1.32 lakh crore in 2013-14.

In case of indirect taxes, such arrears in 2012-13 was Rs 63,139 crore, increasing to Rs 76,159 crore in the next fiscal. "The huge pendency of tax arrears clearly shows failure of tax policy and administration", the report said.

Although taxes should be collected in a fair and judicious manner, "strict action should be initiated against tax evaders," it said.