The Bill to enable the brand new income-tax Act, promised by the finance minister P Chidambaram in Budget 2005-06, is unlikely to be introduced in the Parliament before the next Budget session. The original plan was to introduce the Bill, expected to be half the size of the existing Act, in the Monsoon session, or latest, in the Winter session.

According to official sources, the expert committee, headed by MH Kherawala, chairman, Central Board of Direct Taxes (CBDT), would take at least three more months to finalise a comprehensive draft. Two of the four sub groups rewriting specific parts of the I-T Act are yet to submit their reports to the apex committee.

Once all the sub-groups submit their drafts, the tax planning division of the finance ministry, in conjunction with the CBDT, will have to put them together. Thereafter, the committee will have to get it approved by the finance minister. The sources said that before sending the draft to the law ministry for vetting, it might be put in the public domain for a debate involving all stakeholders.

Eliciting comments on the draft from the public and subsequent modification of the draft, if any, would take a couple of at least months at least. Thereafter, the law ministry would take three months to scrutinise the Bill.

The new Act, sources said, would considerably simplify the Act. The emphasis is on language and use of “right words” that leave little scope for litigation, they added. The phrases would be simple yet legally precise.

There would be an attempt to organise the sections in an orderly manner and remove redundant provisions. Some policy-related changes might also be undertaken, as part of the exercise.

For instance, the exempt-exempt-tax (EET) regime for taxation of small savings is set to be ushered in with the proposed Act.

Under the EET system, all savings instruments will be taxed once, i.e., at the time of withdrawal (consumption), while they would continue to be exempt at the stages of investment and earnings thereon.

( www.financialexpress.com)