Finance minister Pranab Mukherjee is unlikely to go for any major changes in direct taxes when he presents the Budget in February. According to indications, he will restrict himself to minor tweaking in the policy on income and corporation tax, and leave the major changes to April 2012 when he is hoping to implement the Direct Taxes Code.
“As regards direct taxes, since the Direct Taxes Code, 2010, has been introduced in Parliament and is proposed to be effective from April 1, 2012, you may consider forwarding only those proposals which are urgent in nature,” the finance ministry said in a letter to industry associations while seeking their suggestions for the next Budget.Online GST Certification Course by TaxGuru & MSME- Click here to Join
In the letter, the finance ministry has called for suggestions for changes in the duty structure, rates and broadening of tax base on both the direct and indirect tax fronts and has sought economic justification for the suggestions.
As part of the annual Budget-making exercise, the finance ministry seeks suggestions from industry and trade associations, apart from economists and other government agencies, and then acts on some of the proposals. In addition, some of the changes announced in the Budget are based on the developments and suggestions that come through the financial year.
While the government had indicated that it would not push for major changes in tax policy in the next Budget, it has for the first time announced its intent formally.