Centre will vet ideas on DTC

Many disagreements to be resolved

Since the subject of direct tax touches directly or indirectly the lives of millions of individuals in the society, the suggestions and concerns raised by various stakeholders will be taken into account while shaping out a policy relating to taxation regime in the country, the Finance Minister Pranab Mukherjee said while addressing the Parliamentary Consultative Committee (PCC) attached to the Finance Ministry.

Today’s meeting on the issue of DTC was the second round of discussion Mukherjee had with members of the PCC. The first meeting was held on November 4 last. Some of the Direct Tax proposals as mentioned in the draft DTC have evoked strong objections from people at large and trade and industry. For instance, the DTC proposes to bring all savings schemes under an EET (Exempt Exempt Tax) taxation system, which would require all to pay Income Tax at the time of withdrawal of money.

Popular savings scheme

At present, several popular savings scheme like Public Provident Fund, Employees Provident Fund, Government Provident Fund are under the EEE (Exempt Exempt Exempt) mode — wherein tax exemption is enjoyed at all three stages whether investment, accrual or withdrawal.

It also proposed imposition of Minimum Alternate Tax on gross assets. This is being opposed by the industry.  Listing key issues raised by various stakeholders, Mukherjee said these include those relating to proposed shifting from the existing EEE to EET system on taxation on savings, imposition of MAT, taxation on housing loans, taxation on salary of employees, taxation of charitable organizations, capital gains taxation, taxation in the case of salaried class employees and deduction of interest on housing loan.

He assured the members that on these identified issues a considered view would be taken. However, he emphasised that the DTC should not be compared with the Income Tax Act, 1961 “as the attempt is to move forward on the basis of a broad tax base, moderate tax rates, effective implementation strategy and better delivery of services to the tax payers.”