New I-T code to be tabled before Dec: FM

The new income tax (I-T) code that will simplify and replace the nearly five decade-old law will be introduced in the Parliament in the next four months amidst indications that there may be "fine-tuning" of taxes but no "radical" changes in them.

Finance Minister P Chidambaram has been working on drafting the code, which after being tabled in the Parliament, will have to go through a process that will take quite some time before it is passed.

The Finance Minister says that the salaried class pays the maximum taxes, and the honest tax-payer need not worry about any harassment. The long wait for refunds will end once the refund banker system is extended throughout the country.

"Yes, I worked even on Saturday and Sunday. We will introduce it in the Parliament before the end of the calendar year," Chidambaram told PTI in an interview when asked if he was on course on enacting a new Income Tax Code.

He said the code would begin from a zero base and would aim at simplification of the provisions of the law. It would completely replace the I-T Act of 1961, he said.

The history of income tax in modern India dates back to 1860 when the first Income Tax Act was introduced. The present income tax law was enacted in September 1961 based on the Law Commission's report.

Asked if tax payers could expect something in the next budget, Chidambaram said: "Depends on what we find is the revenue picture in the first week of February."

On excise, VAT and service tax, no major changes could be expected till India had a Goods and Services Tax (GST) in place. "So, there will be some fine-tuning but there will no major radical changes in these taxes," the Finance Minister said.

On income tax, Chidambaram said the rates were quite reasonable and moderate. Asked if the rates could be reduced in the next two to three years, he said: "I can't say. The tax base must become wider and compliance must become better."

Asked about the 9% growth projections for India by IMF and the Prime Minister's Economic Advisory Council, and the "conservative" 8.5% outlook projected by RBI, the Finance Minister said: "Well, RBI is generally conservative. I think it is good to have one institution which takes a conservative view."

To criticism that economic growth was not percolating down to the common man, he said it was not correct and there was no connection between the two. "Figures show that more people have got jobs in the last three years than before. They also show that the absolute number of unemployed has increased because the entry into the labour force has been very high," he said.

Chidambaram said somebody must be benefiting from the 9% growth... "In construction, if there is a boom, civil engineers must be employed, masons and carpenters are also getting employed. If 9,37,000 education loans have been given, the families must have benefitted. All that I am pointing out is that clearly some sections must have gained out of this 9% growth. I am not saying all sections have gained."

(Reporting by V S Chandrasekar and Prakash Chawla)