New Income-Tax Act by April 1, 2008: Chidambaram.
In an attempt to make life simpler for taxpayers, Finance Minister P Chidambaram today announced that a new Act will replace the Income-Tax Act, 1961, which is now in force.
If all goes well, it will come into effect from April 1, 2008, and apply to the assessments made for 2009-10,Chidambaram told reporters after he was presented a report to this effect prepared by officials of the Central Board of Direct Taxes and consultants.
The Income-Tax Act has been in need of a makeover after new taxes like fringe benefit tax, securities transaction tax and banking cash transaction tax were introduced in the last few years.
The government has also withdrawn a number of exemptions over the years. In addition, various courts have passed several judgments on various provisions of the Act, making it difficult to interpret.
The Bill for the new Act the Direct tax Code Bill, 2006 is likely to be introduced in the winter session of Parliament.
It will incorporate all direct taxes such as wealth tax, fringe benefit tax and income tax. The changes are aimed at making tax matters easier to understand.
For instance, the concept of "previous year"and "assessment year" will be replaced with the more widely understood and acceptable term, financial year.
An official statement said the report had suggested doing away with all provisions and explanations in the existing law and, wherever necessary, suitably incorporated in the main provision.
It has also suggested removal of all redundant provisions of the law and regrouping similar provisions by placing them at one place.
Efforts have been made to remove existing anomalies and inconsistencies to enable easy implementation and to ensure better compliance. The provisions relating to tax administration and procedures have been kept common for all direct taxes, the statement added.
While no existing taxation provision has been withdrawn in the Bill, officials said the Bill would contain schedules allowing the revenue department to effect changes like amending the fixed deposit rate on its own through a notification rather than having to seek an amendment of the Finance Bill each time.