Amidst differences on some of the issues, the Standing Committee on Finance has postponed adoption of its final report on the Direct Tax code. The Committee is expected to give its nod by March 2 after three more meetings.

According to a source, "It has been agreed to have more meetings on February 17, 24 and March 2. There are some issues and members want more discussion on the entire report."

The Committee’s report may help the Government to introduce some of the provisions of the proposed Code in the Budget for 2012-13.

Although the Government had planned to replace the five-decade-old Income-Tax Act, 1961 with a brand new Code from April 1, 2012, it is now expected to be introduced only from April 1, 2013. A Bill was introduced in Parliament last year which was referred to the Standing Committee on Finance headed by BJP leader and former Finance Minister, Mr Yashwant Sinha.

It is believed that the committee in its draft report has favoured increasing the exemption limit to Rs 3 lakh against Rs 2 lakh proposed in the Code. It is also understood that the Committee, has also suggested categorisation of the home and commercial property for the purpose of income-tax. The income from these two sources should be accorded different tax treatment.

Experts say that the committee’s recommendation is not binding on the Government, but usually to avoid confrontation, the Government incorporates some changes in the final draft of the Bill and place it in Parliament for consideration and passage. We can expect the same with the Direct Tax Code, an expert said.

Shishir.s@thehindu.co.in

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