<h1>Revised Direct Tax Code Ends Area-Based Exemptions, Grandfathers Existing Ones, and Limits SEZ Profit Deductions to Prevent Tax Evasion.</h1> The Revised Discussion Paper on the Direct Tax Code addresses the issue of area-based tax exemptions, highlighting their role in creating economic distortions and tax evasion. While the Code eliminates such exemptions, existing exemptions under the Income Tax Act, 1961, will be grandfathered. The paper also discusses profit-linked deductions for Special Economic Zones (SEZs), noting that while developers' deductions are protected for their remaining duration, similar provisions for units operating within SEZs will be incorporated. The policy aims to prevent profit inflation and profit transfer between taxable and non-taxable entities by not extending these deductions further.