New direct taxes code
A low rate tax regime will definitely give improved tax compliance, both in interest of exchequer and the taxpayer. There is hope that the exchequer will be richer and worries of taxpayers due to the present complicated and tensed regime would end
THE NEW direct taxes code refers to the announcement by the Union Finance Minister Pranab Mukherjee to introduce a simplified Direct Taxes Code to replace the old Income Tax Act of 1961. Low rate tax regime will definitely give improved tax compliance, both in interest of exchequer and the taxpayer. There is hope that the exchequer will be richer and worries of taxpayers due to the present complicated and tense regime would end.
However, the system of Tax deduction at source, which gives substantial proportion of total tax collection, needs to be simplified. And this could be achieved well before the proposed new direct taxes come into effect. A simplified TDS-system should be part of the code too.
There should be common rates of tax deduction, say 10 per cent for all except on payment made to contractors and from unexpected huge earnings like lottery or horse races where TDS may be deducted at rate of two and 30 per cent respectively. Since TDS is only provisional, additives like cess or surcharge need not be added to complicate it.
Further, the system to file annual TDS returns should be restored with a common last date of June 30. It is unfair that small scale businessmen are now forced to spend time and energy to file quarterly TDS returns while the government gets its revenue from TDS every month. The last dates of filing IT returns can be preponed to June 30 and September 30, respectively.
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