Government today said it will soon come out with a new Income Tax Code to streamline the taxation structure and reduce the plethora of exemptions given to various segments of taxpayers.
"I am confident that the new I-Tax code, that will be placed in the public domain shortly for discussion, will reflect my philosophy," Finance Minister P Chidambaram said, while winding up discussion on the Finance Bill 2008 in the Lok Sabha.
The new tax code would become law after debate and deliberations, he said, adding "eventually, we will have to move towards the system of taxation where the exemptions are few, each exemption is reviewed periodically, and each exemption comes to an end after a reasonable period of time."
Direct tax code would replace the existing Income Tax Act, which was enacted in 1961, and would subsume other direct tax legislations.
Pointing out that the marginal rate of taxation, including education cess stood at 33.99 per cent, the minister said: "My endeavour has been to increase the effective rate of corporate tax paid by corporations, but I confess my efforts are not entirely successful because of demands for continuing exemptions or introducing new exemptions."
Chidambaram added: "I have succeeded, to some extent, in removing or imposing sun set clauses, but I cannot say that I am fully satisfied. The work on this regard has to continue."
Together with indirect tax exemptions, direct tax exemptions are leading to revenue loss for the government.
As per the official figures, given by Minister of state for Finance S S Palanimanickam in the Rajya Sabha today, Rs 2,39,712 crore revenue was forgone on account of direct and indirect tax concessions during 2006-07.