Indian Finance Minister: DTC is ready
Speaking exclusively with International Tax Review, Palaniappan Chidambaram, India’s Minister of Finance, revealed the long-awaited Direct Taxes Code (DTC) is ready and that he hopes to pass the DTC Bill before the end of this parliamentary term.
Chidambaram said he considers the VAT reform of 2004-2005 as his crowning glory during his time in office – a reign that spans more than seven years for the man who is now in his third stint as Minister of Finance. But he added that the implementation of the DTC – which he said is “ready” – will soon surpass that achievement.
“I would consider the implementation of VAT in 2004-2005 as the biggest achievement in taxation. At that point, VAT was the most important tax reform that had been attempted,” Chidambaram told International Tax Review. “However, I may add that the DTC is ready and if we are able to pass the Bill before the expiry of the term of Parliament then that would be an even bigger achievement. In the past 12 months, specifically, I have put in long hours in finalising the DTC.”
The DTC Bill originally came in 2010, with the stated aim of creating a new tax code rather than simply amending the Income Tax Act (ITA) 1961. However, since 2010 many of the provisions contained in the DTC Bill have been separately legislated or implemented.
Chidambaram refutes the claim that this clouds the aim of the initial DTC.
“The DTC will indeed be a new code. However, the DTC will not come into force until it is passed by Parliament and brought into effect. Between now and that date, there is no reason why some of the wholesale provisions of the DTC should not be made part of the current law. Hence, we have copied some of those provisions of the DTC into the present Income Tax Act,” said Chidambaram. “But, if you look at the entire DTC, you will find that there are many provisions which are a considerable advance on the provisions of the present ITA.”
“The aims or objectives of the DTC will not in any way be eroded by incorporating some provisions into the present ITA,” he added.