The political crisis over the Indo-US nuclear deal is likely to hit the passage of the much-awaited Direct Tax Code Bill in Parliament. The government is unlikely to introduce the Bill, which would replace the existing Income Tax Act, 1961, in the winter session of Parliament, as scheduled.

The Bill was earlier expected to be tabled in the monsoon session but was later re-scheduled for the winter session beginning in December.

Government sources said, To avoid further controversy, we may decide not to table the Bill in December. Every action of the government is being seen against a political backdrop at present, and we do not want to introduce something in such a scenario.

The threat of mid-term elections, too, has worried the government, and it is not keen to start anything new right now, sources said.

Finance ministry officials are in fact worried that the Bill may eventually be shelved, if the Congress-led UPA is voted out of power, mid term. It happens all the time. The new government may not want to carry forward this agenda of tax reforms, an official pointed out.

Sources also said the Bill has almost been finalised by the ministry. Finance minister P Chidambaram has discussed and approved it, and it is now likely to be sent to the law ministry for its recommendations in the next few weeks.

The proposed Bill is a comprehensive review and simplified version of the existing Income Tax Act. The Bill is also likely to contain a number of policy changes based on the current economic conditions.

The political crisis has already created a furore in both the Houses of Parliament, with both being adjourned on a regular basis.