New Delhi, Mar 24 (ANI): Union Finance Minister Pranab Mukherjee on Saturday said the Direct Tax Code (DTC) would be made operational by next year.
Speaking at the post-budget interactive session organized Federation of Indian Chambers of Commerce and Industries (FICCI), Mukherjee said: "To mop up additional resource mobilization and to give a credibility to the fiscal consolidation target it was needed to give a signal but apart from that in my budget speech I have explained it in details. That I am aiming to reach DTC, because the standing committee report was available to me only on March 6, therefore I have to operationalize it next year.
He further said that in the indirect tax regime, he was moving towards Goods and Service Tax (GST) for which it was important to align the excise duty and the service tax along with the state Value Added Tax (VAT).
"In the indirect taxes I am moving towards GST, in my interactions with the empowered committee of state finance ministers on several occasions, one thing is emerging is that we have to align the tax rates. At the centre and at the state level we will have to align the tax rates of the excise duty and service taxes.
"And after this alignment we will have to align the state rates keeping in view the state VAT (Value Added Tax). The ultimate objective of which is that the tax rate should not go beyond. Therefore the tax proposals are to be made keeping this approach in view," he added.
The DTC is said to replace the existing Indian Income Tax Act, 1961. It is expected to remove most of the categories of exempted income like Unit Linked Insurance Plans (ULIPs), Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Long term infrastructures bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property will loose tax benefits.
The GST on the other hand, is a value added tax, which will replace all indirect taxes levied on goods and services by the Central and State governments. It is aimed at being comprehensive for most goods and services with few tax exemption.
However, the issue of compensation to the states for the reduction in the central sales tax still remain as a major bone of contention between the Centre and states, a point that is yet to gain consensus in order to implement the GST.ANI)
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