India Will Introduce New Tax Code; GDP Will Grow 7 Percent: Finance Minister

India's GDP would grow 7 percent in 2012-2013 financial year, said Finance Minister Pranab Mukherjee Monday.

Speaking at a conference of the Income Tax Department in New Delhi, he said that 2012-13 would be a turnaround year for the Indian economy and that the government had taken all necessary steps to put the economy back on track.

We are taking all necessary steps to ensure that we come back to the path of the targeted GDP (Gross Domestic Product) growth. Of course, it will take some time... but from this year we expect to make a turn around, said Mukherjee, according to a PTI report.

Stressing on the strengths of the Indian economy, the minister said that the economy would bounce back in the current financial year as there was strong growth in the mining sector. He said that declining crude prices and predictions of a normal monsoon in the country would ease out inflationary pressures.

All these factors should help in recovery of domestic growth momentum, he added.

India's disappointing GDP growth in the fourth quarter ending March 31 had raised concerns that the economic growth might slip further down. According to data by Thomson Reuters, India's economic growth slumped to 5.3 percent, a nine-year-low in the fourth quarter ending March 31, much below analysts' estimates for the period.

However, the minister allayed worries on the issue and said that after the 2008 economic crisis, the GDP growth slipped to 6.7 percent in 2008-09, but bounced back to 8.4 per cent in the following two financial years, PTI reported.

According to private analysts, India's growth rate would be between 6.0 and 6.5 percent for the fiscal year ending March 31, 2013 while the government data indicated a growth forecast of 7.5 percent.

Direct Tax Code Bill in Monsoon Session

The finance minister said the government would introduce the new Direct Tax Code (DTC) Bill in the monsoon session of the Parliament. This bill will replace the current Income Tax Act of 1961 and is intended to bring more individuals and companies under the tax net. The bill, if passed in the monsoon session, will come into effect from the next fiscal year.

I am hoping that DTC will be effective from April 1, 2013, he said and added that the government was also concerned about the threat to the nation's security and economy from money laundering and tax evasion. He said that the government was taking necessary steps to check the menace of black money and related illegal activities.