The CBDT has issued a fresh directive on ‘limited scrutiny’ assessment cases allowing the tax officials to widen the scope of such probes if they receive “credible” information of tax evasion by assessees. The policy-making body for the Income Tax Department, however, made it clear in its directive issued on Wednesday that such an enquiry will be specific to the allegation of tax theft that was flagged to the taxman by any other probe agency, in order to ensure that the assessing officer does not undertake a “fishing or roving” exercise resulting in harassment of the taxpayer.

Restaurants and hotels imposing service charge on customers in the name of tips but not passing them full to their employees could court trouble from taxmen. Central Board of Direct Taxes, the apex direct taxes body, has directed its field officials to examine balance sheet and expenditure statement of restaurants and hotels in cases where there is any under-reporting or non-reporting of additional income collected in the name of service charge.

Direct tax collection has already crossed Rs 5 lakh crore and will exceed the budgeted target of Rs 11.5 crore set for the current fiscal, CBDT Chairman Sushil Chandra said. He further said that so far the I-T department has issued refunds to 2.15 crore assessees amounting to Rs 1.15 lakh crore and from now onwards the net collections will increase. "We have already crossed the Rs 5 lakh crore figure that is 44 percent of the net direct tax collection target. This is despite the fact there is a surge in refund," Chandra said.

The Income Tax Department may miss the revenue collection target for this fiscal going by the numbers for the first two quarters. Out of 18 income tax regions in the country, only five — Delhi, Uttar Pradesh (E), Uttar Pradesh (W), Odisha and the North-East — have managed to achieve the revenue goals in the two quarters. According to the Central Board of Direct Taxes (CBDT) mid-year review, Mumbai region was one of the biggest laggards with 3.8 per cent growth in tax collection against a target of 13.3 per cent. At the beginning of every fiscal, the CBDT sets the targets in the Central Action Plan for the full year. The plan document is the key roadmap for enhancing revenue collection.

The survey calls for the implementations of Direct Taxes Code as a clean modern replacement for existing income tax laws. The ambitious Direct Taxes Code, which proposed overhaul of the six-decade old Income Tax Act, was introduced in the Lok Sabha on August 30, 2010. The Direct Taxes Code draft had recommended that the combined ceiling for tax-saving investments be raised to Rs. 1.5 lakh per annum. The draft had also called for an introduction of a fourth slab of 35 per cent on super-rich with income exceeding Rs. 10 crore.

The third version of the Direct Taxes Code (DTC) to replace the five-decade-old Income-tax (I-T) Act, 1961, was placed for public debate recently as part of the government’s tax reform for revision, consolidation and simplification of the direct tax structure into a single legislation. The initial euphoria surrounding the introduction of the DTC appears to have dwindled considering the lack of political willingness to endorse it and the fact that the Lok Sabha has already been adjourned. The intent in making the DTC draft available for public comments at this stage appears to send out a message that the present government has completed the necessary work on DTC 2010.

As part of its reform agenda, the government introduced the Direct Taxes Code (DTC) with the intent to bring about a tax legislation which is simple and reflective of the current global and Indian economic scenario. The DTC has evolved since its introduction in 2009 and currently exists in the form of the Direct Taxes Code 2013 which was released by the finance minister recently and is available for public comments. The DTC 2013 seeks to strike a balance between reining in fiscal deficit and at the same time providing a fillip to the country’s economic growth.

The Direct Taxes Code (DTC) is, by now, a well-known concept to India Inc and the tax professional fraternity as it has been a matter of discussion and debate for almost six years now. The finance ministry released the revised draft—the Direct Taxes Code, 2013—for public discussion and comments in the first week of this month. DTC 2013, set to replace the half-a-century-old Income-Tax Act, has been in the news since 2009; but the latest draft came weeks before the ongoing general election, raising the prospect of the document being junked when a new finance minister takes charge next month.

The Finance Ministry is not in favour of giving tax benefits to businesses for their social welfare spendings in backward regions contrary to the recommendation made by a parliamentary panel. In the new revised draft Direct Taxes Code (DTC) bill, the Finance Ministry has observed that allowing deduction for CSR expenditure would imply the government would be contributing one third of this expenditure as revenue foregone. The Ministry's proposal comes at a time when the new companies law, effective from April 1, require entities with sizeable business to shell out at least two per cent of their three-year average annual net profit towards Corporate Social Responsibility (CSR) activities.

Finance Minister P Chidambaram showed his commitment to the Direct Taxes Code (DTC) by releasing a revised draft of the Bill ahead of the elections, but its fate is in limbo as a non-UPA government might review it afresh or make significant changes to the current draft.Experts said technically, Chidambaram has completed most of the major steps towards replacing the archaic Income Tax Act of 1961 and if the new government is on the same page, it would, at most, be required to refer the Bill to a select committee after tabling it in Parliament. However, the possibility of a new government junking this version of DTC or incorporating a Parliament standing committee recommendations on exemptions is not ruled out.

Union finance minister P Chidambaram will most likely read out a short four-page Budget speech, but present the comprehensive Direct Tax Code (DTC) Bill while tabling a vote-on-account for 2014-15 in Parliament next month. The DTC aims to consolidate all direct tax legislation and will eventually replace the Income Tax Act, 1961.“The DTC is ready. It is my intention to ask the Cabinet for approval to introduce the Bill and leave it as part of Parliament's record,” Chidambaram said in an interview to The Indian Express on Sunday. He, however, said none expected it to be passed in the session.

The proposal to levy a ‘super-rich’ tax, at the rate of 35 per cent, on those earning more than Rs 10 crore a year might not receive support of the Union Cabinet, which is to consider the Direct Taxes Code (DTC) Bill this month. This is because the government might not like to sully the business environment in the country in the run-up to the general elections.The finance ministry is moving a supplementary note to propose changes in the DTC Bill sent to the Cabinet in August. Though it is unlikely to propose any change to the ‘super-rich’ tax provision, officials say the Cabinet might not clear it in view of the polls.

The Direct Taxes Code Bill, which seeks to replace the archaic Income Tax Act, is likely to be placed in Parliament during the winter session."We are trying to bring DTC in the next session," Finance Minister P Chidambaram told reporters on Tuesday.The winter session may start in early December, after the completion of assembly elections in five states.

Not only the Goods and Services Tax (GST), a key indirect tax reform is being left to the next government at the Centre to anchor and implement. The fate of the Direct Taxes Code (DTC) will be in the hands of the 2014 post-election dispensation.This is because the amended version of the DTC, which may include a set of new provisions including one to the tax the super rich at a higher rate, will have to be cleared by the Cabinet first and can be introduced earliest in the Winter session of Parliament.

The minimum slab for income tax will remain at Rs 2 lakh per annum while a fourth slab will be added for those earning more than Rs 10 crore, the Direct Taxes Code to be approved by the Cabinet on Thursday has proposed. The rate of tax for the highest bracket will be at 35%. This will be the first time since 1996-97 when the government settled for a three-slab income tax bracket that there will be an additional slab.

In the final version of the Direct Taxes Code (DTC), finance minister P Chidambaram is likely to incorporate many of the dilutions introduced by his predecessor Pranab Mukherjee to avoid unpleasant surprises to corporate tax payers. So, profit-linked incentives would continue for infrastructure sectors while these would be terminated for others, minimum alternate tax (MAT) would be applied on book profits rather than on gross assets, small savings would continue to be tax-exempt at all stages and existing special economic zone (SEZ) units might continue to enjoy tax breaks for the balance period.

Finance Minister P. Chidambaram expressed disappointment over the changes in the Direct Taxes Code (DTC) proposals brought in by his predecessor Pranab Mukherjee in the Finance Ministry and subsequently by the Standing Committee on Finance.Addressing the 32 Skoch Summit in the city on Thursday evening, the Finance Minister said, “Working right through in 2008, every single section of the DTC was drafted by me, Parthasarathi Shome and few other officers in the Income Tax Department.”DTC law aims to consolidate and amend the law relating to direct taxes.In 2010, changes were made to the DTC 2008 proposals by Pranab Mukherjee, the then Finance Minister. Mukherjee took over from Chidambaram after the 2008 Mumbai terror attacks following which the latter was given charge of the Home Ministry.

The Direct Taxes Code (DTC) Bill, which aims to overhaul the over 50-year-old Income Tax Act, is almost ready and will be taken up in the Monsoon session of Parliament, Finance Minister P Chidambaram said here on Friday.“I am just writing the code. We will introduce it in the Monsoon session. We have another week’s work on that,” he said.The finance minister was here to attend the Silver Jubilee celebrations of the Securities and Exchange Board of India (Sebi). The DTC Bill was introduced in Parliament in 2010 and was referred to the standing committee on finance, headed by Bhartiya Janata Party leader Yashwant Sinha.

The Direct Taxes Code (DTC) bill is not likely to be tabled in the Budget session of Parliament as a limited fiscal space is making it difficult for the finance ministry to accept the Parliamentary standing committee’s recommendations on tax largesse for tax payers. Though the ministry has found merit in most of the recommendations of the standing committee on finance, headed by Bharatiya Janata Party leader Yashwant Sinha, it is not comfortable with the suggestion of keeping the threshold for tax exemption at Rs 3 lakh and significantly increasing the deduction limit for savings. The tax department is considering raising the first slab to Rs 2.5 lakh from Rs 2 lakh at present. Even at a threshold of Rs 2.5 lakh, the exchequer will get a hit of Rs 30,000 crore, according to an assessment of the finance ministry.

Hinting that the central government would not be able to introduce the direct tax code (DTC) by April 2013, Parthasarathi Shome, who heads the high-powered committee on General Anti Avoidance Rules (GAAR), Thursday said it needs to go back to the drawing board as some changes are required. "On the issue of DTC we will have to go back to the drawing board. We felt the requirement of changes in the context of GAAR," Shome said at an interactive session organised by the MCC Chamber of Commerce here.