“The government has identified seven critical areas on the DTC for further detailed examination. We will have a meticulous look at these areas before finalising the draft on the DTC,” Finance Minister Pranab Mukherjee said at an interactive session with the apex chambers of trade and industry on DTC here.
The other DTC proposals, which would be scrutinised by the ministry, deal with capital gains tax on NRIs, double taxation avoidance agreements, taxation of foreign firms and charitable organisations, he said. On the schedule for implementation of the DTC, he said it would be implemented only after ‘a comprehensive review’ of the proposals.
The DTC proposes to bring all savings schemes under an EET (Exempt Exempt Tax) taxation system, which would require people to pay tax at the time of withdrawal of money. At present, several savings scheme like PPF are under the EEE (Exempt Exempt Exempt) mode — wherein tax exemption is enjoyed at all stages whether investment, accrual or withdrawal. As regards MAT, the DTC proposed to impose minimum tax on the gross assets of a company instead of the gross profit. The proposal, however, did not find favour with industry.
Further, while conceding that the government proposes to implement the new DTC with effect from April 2011, Mukherjee assured the industry that the next steps would be taken only after a comprehensive review of the draft by taking on board the suggestions received. “Every effort would be made to meet the aspirations and expectations of our taxpayers and our vibrant corporate sector,” he said. “The new system would also take into account established and time tested practices which have withstood judicial scrutiny,” he added.
Industry concern
Meanwhile, industry body Federation of Indian Chamber of Commerce & Industry (Ficci) raised concerns over various provisions in the proposed Direct Taxes Code and asked the government to either abolish MAT or retain the present form. On the proposed change in computation of MAT, Ficci President Harshpati Singhania said.
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