The Government has initiated a process of taking the direct taxes code (DTC) back to the drawing board again. Parthasarathi Shome, economist and expert on the issue of taxation, said here on Thursday that a detailed consultation process had begun recently.

At an interactive session at the MCC Chamber of Commerce and Industry, Shome said: The world has changed since the DTC was first mooted. I have suggested to the Finance Minister that we need to go back to the drawing board. The changed dynamics had made it obligatory for the Government to re-consider the whole range of tax and related issues.

The consultations with lawyers, industry and academia have begun. It would require effort, manpower and time, he said without going into the specifics. In August, Union Finance Minister P. Chidambaram had indicated that the DTC required a fresh look.

Chidambaram first proposed the idea of the DTC when he was the Finance Minister in the UPA-I Government at the Centre. The proposal envisaged eventual replacement of the Income Tax Act, 1961. The DTC Bill is still to be enacted

Shome felt that taxation imposed by certain States on inter-State movement of goods was a retrograde step in the context of the expected national GST rollout. He also admitted that it was a potential conflict point between States and the Centre.

In his submission to the Finance Committee of Parliament, Shome said he had suggested that in the absence of trust among States and the Centre on tax revenues, efforts must be made to build infrastructure for an information chain on the inter-state movement of goods and taxation by different States on them.

We need to build a clearing house which will monitor such trades and tax credits. Banks could play that role since all the transactions are now routed through them and they have the necessary software installed for online tax payments, he said. The West Bengal Government has reintroduced an entry tax this fiscal.