Indian Direct Taxes Code Will Rationalize And Simplify

by Mary Swire, Tax-News.com, Hong Kong

13 July 2009

The Indian budget announced the development of an income-tax code which consolidates all existing tax exemptions and concessions in one place, the Central Board of Direct Taxes (CBDT) Chairman, Mr S.S.N. Moorthy, has said. This should remove the complexity in the income-tax law as the exemptions and concessions are currently spread over various chapters. The thrust of the proposed new income-tax code, a draft of which will be made public within 45 days, would be to simplify the existing legislation and make the law more understandable for an ordinary taxpayer. Following consultations with the public, the Government will finalise the Direct Taxes Code Bill during the Winter Session of parliament.

The personal income tax exemption limit has been increased for small and marginal taxpayers and senior citizens. The personal income tax exemption limit for senior citizens is now INR240,000 and INR190,000 for women. For all other categories of individual players, the personal income tax limit is INR160,000. The 10% surcharge on personal income tax has been removed. The surcharge on direct taxes, usually levied to meet the revenue needs arising from natural calamities, will be phased out. To simplify tax returns, the government is working on early introduction of SARAL-II.

Another initiative is the extension of the presumptive tax scheme to small traders (not confined to individuals only) having a turnover less than INR400,000 with exemption from advance tax obligation. The scheme could be extended to professionals with gross receipts less than the audit requirement threshold.

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