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Indian government proposes radical changes in direct taxes
The Indian government has initiated radical tax reforms through a draft code that aims to reduce the tax burden and streamline the over four-decade-old Income Tax Act. The Direct Taxes Code Bill, 2009 ('Code') proposes to align the Indian tax laws with internationally accepted taxation principles and best practices. The Finance Minister has indicated that the Code has been drafted from scratch and does not attempt to modify the existing tax law. Amongst the key features of the new Code are its lucidity and brevity. A concerted effort has been made to increase the tax base and to improve the vertical and horizontal equity of the tax system. The Code is expected to eventually pave the way for a unified taxpayer reporting system in India.
It is without doubt a bold and positive move towards creating a robust and dynamic tax system in India. The Code is open for public comments for 45 days and is expected to be tabled in the winter session of the Parliament. The Code is expected to be implemented from April 1, 2011.
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