Direct Taxes, now the major resource provider to the Central Government, have grown at an average annual rate of 24 percent in the last five years and have nearly trebled from Rs.1,32,771 crore in financial year 2004-05 to about Rs.3,78,000 crore in financial year 2009-10, increasing its share from 4.1 percent to 6.1 percent of the Gross Domestic Product (GDP).

The Central Board of Direct Taxes (“CBDT”) had released the draft Direct Tax Code (“DTC”) in August 2009 with a view to simplify tax legislation in India. Based on the response and comments received for the DTC, the CBDT has released “Revised discussion paper on The Direct Tax Code” (“revised draft” / “revised discussion paper”). The revised draft proposes certain modifications to the DTC. The revised DTC is proposed to be presented in the monsoon session 2010 of the Parliament and will become law effective 1 April 2011 once enacted.

Investors in the Employee Provident Fund (EPF), Public Provident Fund (PPF) and insurance plans for retirement have a reason to worry. The Direct Tax Code (DTC), meant to replace the existing Income Tax Act, proposes to introduce the exempt-exempt-taxation (EET) regime for all retirement corpuses.

The finance ministry may drop a provision in the draft direct taxes code that allows local tax laws to override India’s tax treaties with other countries, as it looks to avoid uncertainties over existing bilateral tax arrangements. The finance ministry has formed a special task force within the Central Board of Direct Taxes to rework the draft, which is expected to be made public next month.

The Comptroller and Auditor General (CAG) has raised several concerns over some provisions of the proposed direct tax code (DTC), the draft of which was unveiled by the finance?ministry in 2009. The country’s statutory auditor pointed out in a communication in March that some key provisions of the code, such as the ones on international taxation, could prove problematic. Other concerns relate to changes in taxation for the voluntary sector.

Redrafting the Direct Taxes Code (DTC) is proving to be an uphill task for the finance ministry, bombarded with comments from various stakeholders. The Central Board of Direct Taxes (CBDT) has received about 10,000 suggestions on the code, which seeks to replace the Income Tax Act of 1961.

The government on Monday said that the revised draft of the Direct Taxes Code (DTC), which is aimed at simplifying the tax structure, would be made available for public comments in the first week of June.

Centralized processing centres for improving tax payer services in two more places. Union Finance Minister Shri Pranab Mukherjee has said that the government intends to introduce the Direct Taxes Code in the forthcoming Monsoon Session of the Parliament. He was addressing the Central Direct Tax Advisory Committee.

Direct Taxes Code Bill, 2009, could soon set the tone for all our future wealth-creation decisions. If enacted, the bill will not only change the amount of tax you pay, but also transform how you invest, borrow and spend your money. While most tax breaks may be taken away, the process of filing taxes will be simpler.

People with more than Rs 10 lakh annual income may not get the tax relief originally proposed in the Direct Taxes Code, as the Finance Ministry is for tweaking slabs across the board to offset concessions elsewhere.