BJP demands withdrawal of draft Direct Tax Code

New Delhi, Nov 4 : Describing the proposed Direct Tax Code (DTC) as deceptive and anti-people, the BJP today demanded that the draft code should not be made into a law in its present form.

''We will soon meet the Finance Minister, and urge him to reconsider the provisions and ensure that it was not passed in its present form,'' Leader of the Opposition in the Rajya Sabha Arun Jaitley told reporters here.

He said the draft looked simple but in effect it proposed very high taxes.

Earlier, speaking at a seminar on the issue, he launched an all-out attack on the UPA Government, saying it was proposing high taxes now to meet the government expenditure that had increased by leaps and bounds since it came into power in 2004.

Mr Jaitley pointed that after liberalisation in early 90s, the quantum of various taxes and duties was reduced to encourage export and encourage domestic consumption, but the UPA reversed this policy in 2004, resulting in the increasing burden on the people.

He said low rate of taxation was a must to empower the consumer to buy more to stimulate demand and in turn give a fillip to growth, especially in today's recessionary times.

In a competitive economy, it was essential that the load of taxes on a product or a service was reasonable, as the consumers all over the world buy products or hire services and not the tax accompanying them, so if the taxes were burdensome, the consumers tend to discard the domestic products and go for cheaper products coming from elsewhere, he said.

''The essential prerequisite of any direct taxation policy of the Government should be to ensure that there is a stability in the taxation rates applicable to the assessee and that the taxes are not excessively burdensome,'' he said.

Mr Jaitley said the Direct Tax Code had been drafted without adequate consultation with all stakeholders. Even within the Government and CBDT, the discussions have been inadequate. The preparation of the document has been highly centralised as a result of which the document raises several issues which need an adequate discussion, he said.

''The tax burden on assessees in the category of income from Rs 3 lakh to Rs 10 lakh annually may actually increase. The Direct Tax Code ostensibly places the consumers in the income of Rs 1.6 lakh to Rs 10 lakh in the 10 per cent bracket. This is an illusion.

Allowances such as HRA, EPF deductions, medical, LTC, leave encashment are entitled to a certain category of exemptions now all will get added to the income and hence become taxable,'' said Mr Jaitley.

The taxation policy of the Government has been designed to encourage savings which are invested in public securities which are used for developmental activities. ''When these are returned back to the assesses, the same are exempt from income tax, but the Code proposes that this exemption should be withdrawn and the same should now be subjected to taxation. This will discourage the savings,'' he said.

--UNI

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