NEW DELHI:The Union Finance Minister, P. Chidambaram, on Tuesday announced that the government would soon come out with a new Income Tax Code to streamline the taxation structure and reduce the plethora of exemptions given to various segments of taxpayers.
“I am confident that the new Income Tax Code, that will be placed in the public domain shortly for discussion, will reflect my philosophy,” he said while winding up the discussion on the Finance Bill 2008 in the Lok Sabha.
Law after debate
The Finance Minister said the new tax code would become law after debate and deliberations and eventually the country would have to move towards the system of taxation where the exemptions are few, each exemption is reviewed periodically and each exemption comes to an end after a reasonable period of time. Stating that the marginal rate of taxation including education cess stood at 33.99 per cent, he said: “My endeavour has been to increase the effective rate of corporate tax paid by corporations, but I confess my efforts are not entirely successful because of demands for continuing exemptions or introducing new exemptions.I have succeeded to some extent in removing or imposing sunset clauses, but I cannot say that I am fully satisfied. The work in this regard has to continue.”
Together with indirect tax exemptions, direct tax exemptions are leading to revenue loss for the government. As per the official figures, given by Minister of State for Finance, S.S. Palanimanickam in the Rajya Sabha on Tuesday, Rs. 2,39,712 crore revenue was forgone on account of direct and indirect tax concessions during 2006-07.