DTC may swell revenue collection in subsequent years

JAIPUR: The proposed Direct Taxes Code (DTC) may have a neutral impact on tax revenue collection in its initial years of implementation but it���s likely to swell the exchequer revenue in subsequent years. Direct taxes comprise 55% of the revenue receipt. Revenue secretary P V Bhide told ET that the new code is aimed at bringing simplification and level-playing field for domestic and foreign tax players. ���We are trying to ensure strict compliance and once it���s done the revenue graph will automatically go up despite the proposed sharp fall in tax rates,��� he said on the sidelines of a CII seminar on Direct Taxes Code.

Mr. Bhide said that the era of subsidies and free lunches for corporate would be over. ���We may have done away with exemptions and subsidies but at the same time we have brought down the corporate tax rate from 34% to 25%. It would continue attracting investments,��� he said.

The Direct Taxes Code would replace the current Income Tax Act (ITA) with effect from April 1, 2011 and the Bill to this effect would be tabled in Parliament���s winter session. The DTC is aimed at bringing 90% of the corporate India into tax net that doesn���t pay any tax now. ���By reducing the tax rate and introducing transparency at every step, we would encourage companies to post their profits and pay taxes. Companies not making profits will also have to pay at least 2% of their total assets��� value as minimum alternative tax (MAT),��� he said.