The Direct Tax Code (DTC) is proposed legislation aimed at modernizing, simplifying, and consolidating India’s tax laws into a single, efficient, and transparent code.

On August 21, 2024, Finance Minister Nirmala Sitharaman introduced the forthcoming Direct Tax Code (DTC) to mark the 165th anniversary of Income Tax in India. The DTC is intended to replace the existing Income Tax Act of 1961 with a more straightforward and transparent system.

Evolution of the DTC

• 2009: The first draft of the DTC was proposed to replace the Income Tax Act.
• 2010: A revised discussion paper was released, followed by the introduction of the Direct Tax Code Bill, 2010, in the Lok Sabha.
• 2013: The DTC was revised based on feedback from stakeholders.
• 2017: A six-member task force was established to draft the new Direct Tax Law.
• 2024: Finance Minister Nirmala Sitharaman announced the forthcoming introduction of the DTC.
• 2025: The DTC is expected to be introduced alongside the Budget 2025.

Purpose

• Facilitate easier compliance by reducing the complexity of tax laws.
• Make the tax system more user-friendly.
• Provide clear and predictable tax regulations.
• Minimize disputes through a simplified tax code.

Comparative analysis Between the Income Tax Act and the Direct Tax Code as follows:

-Navneet Shukla