Income Tax Act must be replaced by Direct Taxes Code immediately: Chidambaram

Former Union Finance Minister and senior Congress leader P Chidambaram asserted during the debate on Finance Bill as well as the Appropriation Bill in the Rajya Sabha on Monday that the Income Tax Act must be replaced by Direct Taxes Code.

“This is a legacy issue. The entire Income Tax Act must be replaced by a Direct Taxes Code. When we were in government, I have helped draft a Direct Taxes Code when Pranab Mukherjee tried to improve it. When I returned to the Finance Ministry, I tried to improve it. There are three versions of the Direct Taxes Code. Many of the provisions will be outdated. So, get rid of all of them, but please bring a Direct Taxes Code immediately,” said Chidambaram.

On the Appropriation Bill, Chidambaram pointed out the policies that had been brought in resulted in direct tax revenue as a proportion of the GDP, exceeding indirect tax revenue for the first time in 2013-14.

“Indirect taxes as a proportion of GDP should not cross direct taxes. Direct taxes must increase. In 2021-22, both have become equal. If your total tax, as a proportion of GDP, falls by as much as 0.4 per cent or 0.5 per cent, there is something seriously wrong with your tax policies and tax administration... This trend indicates that people are accumulating income and wealth and not paying enough taxes, whereas the large mass of people, who pay indirect taxes, are bearing the bulk of the burden,” Chidambaram said.

Watch the entire speech here: