Direct Tax Code Comes Closer to Reality for India
August 22, 2013 Taxation in India
NEW DELHI – India is slowly approaching the eventual implementing a long-awaited update to the national tax system, as Ministers hash out final tweaks to the country’s proposed new tax legislation.
On August 22nd the Cabinet of Ministers of India is set to give its final approval to the Direct Tax Code, bringing the matter closer to a conclusion following more than two years of discussions and debate.
The Direct Tax Code is a proposed replacement for the current Income Tax Act, and will bring about the biggest revision to the country’s tax system since 1962.
The government hopes that the Direct Tax Code will improve the national economy by modernizing the country’s tax system, removing tax distortions, and by helping raise India’s tax-to-GDP ratio.
The final version of the Tax Code in front of the Cabinet now also features the introduction of a new income tax bracket for individuals earning in excess of INR 100 million, with the marginal tax rate to be set at 35 percent, compared to the current top rate of 30 percent on all incomes above 30 percent.
If passed by Cabinet, the Code may be put in front of Parliament for a final vote in the period between November 2013 and December 2014.
If approved by Parliament within the scheduled time, the Direct Tax Code may come into full effect on April 1st 2015.
Photo by Dinesh Cyanam