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“You have to collect taxes from someone to give relief to someone else as public expenditure cannot be compromised.” In theory, lower tax rates and liberal tax slabs could also mean more compliance, resulting in a so-called virtuous cycle, meaning more people pay taxes.

The finance ministry on 22 November set up a task force with Central Board of Direct Taxes member Arbind Modi as convener and chief economic advisor in the finance ministry Arvind Subramanaian as a special invitee to draft a new direct tax code in the light of global best practices and the economic needs of the country.

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