Stakeholders concerns to be addressed before new Direct Tax Code: FM

New Delhi, Nov 5 : Assuring of meeting aspirations and expectations of taxpayers and corporate sector, Finance Minister Pranab Mukherjee has said the government will bring in the new Direct Tax Code only after consulting and reviewing suggestions from taxpayers and the corporate sector.

''We are trying to bring the new taxation regime, which can last for another 50 years. Therefore, our endeavour is to see that new taxation system should include the basic features and time tested procedures of existing act, which have survived judicial security over the years,'' he said while addressing the first newly constituted Parliamentary Consultative Committee attached to his Ministry here yesterday.

The Minister said he has started discussions within the Central Board of Direct Taxes on the suggestions received so far, and added that the outcome of the discussion will be used for modifying the proposals contained in the draft Direct Tax Code.

He said the government's endeavour is to incorporate the best practices prevailing across the globe and to use innovative methods for attaining equity, vertical and horizontal, ensure growth with sustainability, create stable fiscal eco-system and have well regulated free markets in the Draft Tax Code.

''We want to present the stakeholders with a tax regime which is simple and broad based leading to lowering of tax rates, better tax compliance, reduced litigation certainty and stability in taxation system,'' he said.

On the basis of interactions with the stakeholders, the government has identified nine critical areas for further detailed examination.

These relate to Minimum Alternative Tax (MAT) based on gross assets; Capital Gains Taxation in the case of non-residents; the Income Tax Act and the Double Taxation Avoidance Agreement (DTAA); General Anti-Avoidance Rule (GAAR); Issues relating to effective management control and taxation of foreign companies in India; Taxation of charitable organisations; shift from EEE to EET taxation system; taxation of income from house property in case of Self-Occupied Property (SOP) by the individual; and Taxation in case of salaried class employees.

Mr Mukherjee said the draft Tax Code has following new features: --The rate of slabs for personal income tax in the case of individuals are: Rs 1.6 lakh to Rs 10 lakh (10 per cent); Rs 10 lakh to Rs 25 lakh (20 per cent) and more than Rs 25 lakh (30 per cent); --The rate for corporate tax for companies is 25 per cent; -- Proposal for Advance Pricing Agreement in respect of arm's length in relation to an international transaction; --Rationalisation of deductions and exemptions for streamlining the administrative processes and also to reduce the rent seeking behaviour; --Proposal for General Anti Avoidance Rules (GAAR) to check the treaty misuse by the third party residents.

--UNI

(c) 2009 Published with permission from United News of India.
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