Income Tax code ready: FM

The much-awaited draft of the Income Tax code, which is expected to simplify and replace the existing law, is ready and will be released along with a discussion paper, Finance Minister P Chidambaram said today, but did not put any time-frame for its release.

"The Income Tax code is ready as of yesterday. But I am not in a position to release the code because I have decided that I will release it along with a discussion paper," said Chidambaram.

The discussion paper would explain the reasons for writing the code, what are the changes between the old law and the new law and the rationale of these changes, he said.

"The draft of the discussion paper that was shown to me is 70-page long, I am trying to compress it to about 50-60 pages. I have cleared only 25 pages of that," he said.

Once the discussion paper is ready, the code would be floated along with it for wider consultations.

"When will that happen I cannot say, depending on how much time I would find to clear the discussion paper. But the code will be released only with discussion paper," he said.

To a question, he explained that the code is only a draft, which will be discussed for one year in the country and will probably be introduced two years after.

He said the code is not an amendment to the Income Tax Act, but was based on different assumptions for an emerging economy.

"I am not taking IT Act and amending it. I am writing a new code, based on very different assumptions, very different postulates, very different outlook to direct taxes," he said.