The proposed direct tax code announced recently by the finance minister, which will be effective from April 2011, aims at a comprehensive reform in the sphere of personal and corporate taxation, according to G Ramaswamy, vice-president of Institute of Chartered Accountants of India (ICAI).
Speaking to reporters here on Saturday, he said: "There is a great difference between code and the act. The government is trying to replace direct tax code with the present system of Tax Under Finance Act."
The code would be a permanent affair like CrPC or IPC. Once the tax act is converted into a code, it would generally not be necessary to introduce changes every year along with budget. This is a reform which the government wants to bring in for the good of the people, he said.
The code has proposed no change in the exemption limit of personal tax. It remains Rs 1,60,000 for men Rs 1,90,000 for women, and Rs 2,40,000 for senior citizens.
To a query, Ramaswamy said the direct tax code is the simplified version of paying various kinds of income taxes.
Referring to the Foreign Exchange Management Act (FEMA), he said the main objective behind FEMA is to consolidate and amend the law relating to foreign exchange. "FEMA is applicable to all parts of India. It is also applicable to all branches, offices and agencies outside India owned or controlled by a person who is a resident of India," he added.
There are nearly 1.65 lakh chartered accountants (CAs) in India and nearly 6.5 lakh students have enrolled for the CA course, he said.
Referring to the activities taken up by the Hubli unit of ICAI, Ramaswamy said a centre has been opened for CA coaching. After the completion of the three-year course, campus interview will be conducted to provide employment for the candidates.