I read the direct tax code as was sent to me by IMC. On first glance I felt god saved the common Indian by 10% as the number of section is reduced. But when I analysed it then I found it was not really simple.
Simple Tax Code to my mind will be a tax code where a person is not burdened by tax, there is no major incentive for evasion and also the tax payer does not involve too much in tax planning, tax dogging or realignment of Income Tax files for getting Tax benifits.
Thus, I would say the first and foremost thing that must be done is all exemptions like 80C, 80D should be scrapped forthwith. The person must not divert his energy in planning such things but must concentrate more on work.
Further, the tax slab must be simple
that is -
upto Rs.3.00 lacs exempt.
then next 7.0 lacs 10%.
then next slab till 1.00 cr. 20%.
then next slab till 10.00 cr. 30%
then next slab till 100.00 cr. 40%
and after that 50% flat.
for corporates 25% flat should be the tax. There must not be any FBT or Dividend Tax.
I think depreciation must have 3 slabs of 10%, 25% and 50% only (the last in case of electronics like mobile).
I personally feel that there must be tax on all incomes like capital gains, agriculture, export or any other profession and no special treatment for writers or women or old aged persons.
The deemed income on second house must be done away and audit must be on Rs.2.50 crores.
If the tax is so simple no one will divert income in name of family members and will not float 10-15 firms. Thus simplicity will mean honest tax payer and tax must be thought as responsibility towards nation and not a liability.