New Delhi (JPN/Bureau): For the last two years, Government has been unable to take any concrete steps to achieve its dream of making the tax structure simpler. Union Minister of Finance Pranab Mukhjerjee has been trying to take this agenda forward through Goods and Services Tax (GST) and Direct Tax Code (DTC) but a lack of consensus has till now prevented any concrete change.

Therefore, the challenge of bringing in reforms is something that the Minister would have to win over this Budget.

Case of DTC

In the path of economic reforms, tax reforms are a very important milestone. A nation hurtling towards two-digit GDP growth rate needs to get rid of its ancient tax structure. The Central Board of Revenue Act, 1963 constituted for Direct Tax system has now become redundant in the new age economy.

Former Finance Minster and now Home Minister P Chidambaram began work in this direction and it resulted in the Direct Tax Code Bill. That was one year back and since then there has been a lack of consensus on its various provisions. The chances of its finalization appear slim even till April 1, 2011.

Consensus on GST

Same problems ail GST implementation as well. Centre has not been able to bring state governments on same page in its endeavour of reforming the Indirect Tax system in the country. It was supposed to have been introduced first by April 2010 but was later postponed to April 2011. Finance Minister is still trying hard to bring it in force but it does not seem possible that it will happen even by the new deadline of this year.

Redundant laws

Apart from tax structure reforms, Finance Minister also faces the challenge of updating archaic financial regulations. Though he made his intention for the same clear in his last Budget, there have been no measures in that direction.

There is a crying need to bring in changes in laws like the Reserve Bank of India Act, SEBI Act and other laws in the changed global economy. Laws need to reflect modern economic needs.