The Direct Tax Code, which will replace the Income Tax Act and simplify procedures, is being re-worked by the Finance Ministry. Sources tell that the revised draft code will be released for public consultation in the next two to four weeks. Media tells what changes the second draft is likely to contain.

The first draft of the Direct Tax Code, made public last August, had raised several concerns. The opposition, industry, tax experts as well as the CBDT (Central Board of Direct Taxes) had sought several changes. In fact, the tone for the changes was set by Finance Minister Pranab Mukherjee himself, who defined nine areas of concern.

Experts say the second draft is likely to allow India's double taxation treaties with foreign countries to prevail. The first draft had provided for domestic law to override such treaties. The most contentious proposal, however, was to levy MAT (Minimum Alternative Tax) on gross assets.

Rahul Garg, ED, PriceWaterhouseCoopers says, "In relation to MAT being levied on the value of the asset, particular in infrastructure companies, I think that is an area where definitely there would be a bit of modification."

Tax experts say the benefits for SEZs (Special Economic Zones) are likely to continue and the distinction between long-term and short-term capital gains tax is likely to stay.

Tax slabs for personal income tax are also likely to be re-jigged and will not be as liberal as earlier suggested, at least in the first year of implementation.

Once the second draft is released, the code will be referred to a Parliamentary Standing Committee, which is expected to give its recommendations by December this year. With this timeline, the DTC may well be implemented from April 2011, in line with what the Finance Minister said in the Budget this year.