Tax compliance will be ensured by Direct tax: Mitra
September, 30th 2010
The direct tax code (DTC) may result in Rs.55,000 crore revenue loss in the first year of implementation, but tax collection will increase in the subsequent years because of greater compliance, Revenue Secretary Sunil Mitra said Wednesday.
During the first year, revenue will certainly be low. But we hope the better compliance will boost tax collection in the subsequent years, Mitra said at an event organised by Confederation of Indian Industry (CII).
He said total revenue loss in the first year of implementation is estimated to remain at around Rs.55,000 crore. The major loss is likely to happen in corporate income tax collection, estimated at around Rs.39,000 crore.
The new norm, which proposes to raise the exemption limit on individual income tax from the current Rs.1.6 lakh to Rs.2 lakh will be effective from April 1, 2012.
Corporate income tax will be reduced to 30 percent from the current 33 percent.
The revenue secretary said the key objective of the DTC was not to reduce tax rates, but to bring greater transparency, continuity, consistency and predictability in the tax system.
Mitra said the government would try to ensure congruence between direct tax code and international financial reporting standards (IFRS).
He said the new tax regime was consistent with global standards and would be beneficial for individuals as well as industries.