New Delhi: Finance Minister Nirmala Sitharaman dashed off on Tuesday any prospects of unveiling the "Direct Tax Code" in the Union Budget she presents in Parliament on Friday.
"There is no proposal under consideration," she said in terse written replies to Congress member Anand Sharma and the BJP’s Sambhaji Chhatrapati and C M Ramesh in the Rajya Sabha, pointing out that the work is still in progress.
Irrespective of whether this statement coming three days before the budget amounts to leaking a prime aspect of the budget or not, Sitharaman has opted to lace her reply with details on how the government had initiated serious action to simplify direct tax laws, including the Income Tax Act of 1961, to restrict tax evasion and widen the tax-payer’s base.
A task force constituted in November 2017 to draft a new direct tax law has not yet given its report despite extensions, reconstitution and nomination of new persons, she disclosed. New terms of reference (TOR) were added to it as late as on June 24 that may require it more time to submit the report.
The latest progress in this regard is that the task force is required to submit its report to the government by July 31, the minister added, with silence on whether it will cover the new issues tasked on June 24.
The direct tax code whenever implemented will replace the Income Tax Act. But since the report of the task force is to come only after the budget, one will have to wait till the next budget next February.
Once the task force report is received, the government will have to seek views of all stakeholders by publishing a draft proposal and that itself will take long time before it is reflected in the next budget.
At the time of speeding up the Goods Services Tax (GST) four years ago as the single all-India indirect tax, the Modi government had promised the code as simplification and reform of the direct tax but the progress on it remains slow.
Since Sitharaman has shot down all speculation over the direct tax coming anytime soon, she may try to tweak the income tax rates for the time being in the budget to provide a temporary relief to keep alive the hope of an easy direct tax code ultimately.