We'll not impose unacceptable taxes from DTC: FM

We'll not impose unacceptable taxes from DTC: FM

Centre to have an open mind on taking suggestions on the draft

“I do not have a closed mind. What ever is being proposed in the draft DTC is not Bhagwat Gita, which cannot be changed. We will not impose any thing. If we find people do not accept some (taxation) measures, we will not force upon them,” he said while replying to a discussion on Supplementary Demands for Grants for 2009-10 in the Lower House.

Several objections

In August last the government had released the draft DTC, which seeks to replace the archaic Income Tax Act, 1961. 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.

At present, several popular savings scheme like Public Provident Fund (PPF), Employees Provident Fund (EPF), Government Provident Fund (GPF)  are under the EEE (Exempt Exempt Exempt) mode —— wherein tax exemption is enjoyed at all three stages whether investment, accrual or withdrawal. Similarly, the draft DTC proposes imposition of Minimum Alternate Tax (MAT) on gross assets. This is being opposed tooth and nail. In view of stiff resistance to these type of tax proposals being suggested in the draft DTC, Mukherjee had recently said before finalising the legislation to replace the existing Income Tax Act, the government would meticulously examine some of the key proposals of the Direct Taxes Code (DTC) including those relating to taxation of popular savings schemes and imposition of the MAT. “We are studying the feedback we are getting on the DTC. We will try toe evolve consensus before going ahead with legislation (to replace IT Act),” he said.  “Similarly we are working on introduction of the Goods and Services Tax (GST). Of course there are still differences on some aspects of the GST. We are trying to resolve these. We will not impose any thing on any body,” he said.

Asserting that the government is committed to bring down the fiscal deficit to manageable level once the economy is put back to track of high growth rate, “we know that the high level of fiscal deficit is unsustainable. We plan to bring it down to 4 per cent in 2011-12 from 6.8 per cent as pegged in the current fiscal.”

Later the house approved the Supplementary Demand for Grants for 2009-10 thus allowing the government to raise public expenditure by Rs 30,943 crores during the current fiscal.

Mukherjee said despite proposed hike in public expenditure the government would not exceed the borrowing figure as proposed in the 2009-10 Budget.