New Tax Code aims at simple tax structure

The government released a brand new Direct Taxes Code that will replace the 1961 Income Tax and other direct tax laws, saying it will provide a simple tax structure for better compliance.

"We want to promote stability", Finance Minister Pranab Mukherjee said, while releasing the Direct Taxes Code.

The new code will provide for a simple structure for capital gains tax, savings instruments and non-profit organisations, he said, adding that there will be less scope for litigation.

"We expect to have better compliance and better collection of taxes," Mukherjee said.

Home Minister P Chidambaram, who during his tenure in the Finance Ministry had initiated work on the Code, said that this was a brand new Code written from scratch.

"There is no point looking at this with reference to the 1961 (I.T.) Act. Hours of work have gone into it preparing it... you will be doing a dis-service if you look at it from the present Income Tax law," he said.

The present tax laws were only a feast to lawyers and the best way to read the provisions of the Code would be to study the relevant chapter before going into the provisions, Chidambaram said.