Most finance ministers in the past gave direct tax reforms a miss, preferring discretion to valour, until P. Chidambaram took the bull by its horns and drafted a new code to replace the Income Tax Act of 1961. The new code is expected to simplify the tax procedures and adopt international best practices. But it could be tough on investors because their overall tax burden is likely to increase.
I am surprised that people are vocal against EET .. with funny "arguments like benefit to a saver when he has earning potential, but will tax him in his old age".<br /> <br /> EET is the right way. <br /> <br /> It will encourage saving (capital & tax) during the peak earning (and hence taxation) years. <br /> <br /> Tax will be deducted typically at a time when the person would not have any other income (i.e. after retirement) with an expectation that tax liability (slab) will also be lower.<br /> <br /> It will also increase the returns, as instead of taxing upfront and been paid to govt, the tax will get "invested" and more than pay for the deduction in later years.
on Apr 1, 2010The EET mechanism proposed in the Direct Tax Code is not suitable for Indian context. In India we should encourage investment/saving by middle class. Further, the taxability of Long Term Capital Gain should also need reconsideration.
on Jan 25, 2010