New Delhi:
The Direct Tax Code – a new income tax bill meant to simplify compliance for individual taxpayers – will be introduced separately, and not as part of the Union Budget 2025 to be delivered by Finance Minister Nirmala Sitharaman on Saturday morning, sources have told NDTV.
There had been reports the new tax code, or DTC, would be read out with the budget speech.
Talk of a new direct tax code emerged when Ms Sitharaman presented the full 2024/25 budget in July; then she had said the goal was to make current income tax laws simpler to read and understand, and reduce the number of pages of the I-T Act of 1961 by a staggering 60 per cent.
The 1961 Act – which deals with imposition of direct taxes, i.e., personal and corporate tax, as well as those on securities transactions, gifts, and wealth – has 23 chapters and 298 sections.
It is also expected to calculating tax amount and filing returns easier and, among the biggest likely changes, will also scrap the concept of financial year (FY) vis-a-vis accounting year (AY).
It is further expected that income from mutual funds and from investments in the Life Insurance Corporation of India, or LIC, will be taxed at five per cent. Both are exempted as of now.
There is also talk of a flat 15 per cent tax on dividends earned.
Sources then had said the new revised law would be introduced in the next Budget session of Parliament, i.e., which begins Friday with the tabling of the annual economic survey.
Before Ms Sitharaman had announced the overhaul of the I-T Act, the CBDT, or Central Board of Direct Taxes set up an internal committee to oversee the review; this included establishing 22 specialised sub-committees to evaluate various aspects of the old law.
Also, in October the centre invited members of the public, including stakeholders and subject experts, to offer their views and recommendations. By January, some 7,000 were received.
With input from agencies
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