Revised draft of Direct tax code will be available for comments soon

The revised draft of the Direct Tax Code (DTC), that will replace the Income Tax Act, will be available for comments soon before it is finalised and placed before Parliament for its approval, possibly in the winter session.

Stating this at a seminar on Wednesday, the Central Board of Direct Taxes (CBDT) chairman, SSN Moorthy, said the revised draft of the simplified direct tax code would be available for comments in a month or two.

The first draft of the DTC was made available in August last year. The industry had, however, protested certain proposed taxes in the DTC. The draft suggested 2% Minimum Alternate Tax (MAT) on the gross asset value of a company, instead of the current levy of 15% on book profits.

Moorthy said the government is looking into the MAT issue. “All the issues raised by the industry and other representatives are under consideration and addressed in the revised draft,” the CBDT chief said.

Besides MAT, the revised draft will also address other issues such as tax exemption for the housing sector and taxation of savings.

Moorthy said the department was hopeful of tax collection of Rs 3.80 lakh crore in 2009-10, short of Rs 7,000 crore as per the revised estimates.

“The final figure will be available in mid-May when all the transactions are compiled. As on date it is somewhere around Rs 3.78 lakh crore…it may be Rs 3.80 lakh crore,” Moorthy said.

In the budget for 2009-10, the target was set at Rs 3.70 lakh crore. For the next year 2010-11, the budget estimate for direct tax collection is Rs 4.30 lakh crore.

Moorthy said that the TDS component in direct tax collection is quite substantial. It stood at Rs 1.53 lakh crore in the last fiscal, about 40% of the total direct tax collection.