JOIN USCapital gain savings scheme on the anvil
“A capital gain savings scheme shall be announced where deduction or rollover of gains is permissible in accordance to Section 53 of DTC,” Joint Secretary, TPL-II Central Board of Direct Taxes, Arbind Modi told the gathering at open house session here.
“Under the scheme we would allow people to invest in equity and debt, and tax shall be levied only on withdrawal,” Modi said at a Ficci interactive session.
“Its going to be a huge relief for tax payers, and it implies that the capital gains will be sheltered,” Member Ficci National Executive Committee Mukesh M Patel told PTI.
“The capital gains saving scheme has not been mentioned either in the discussion paper of DTC nor written in the code, it has a passing reference in the Exempt-Exempt-Tax (EET) segment which wasn’t visible so far,” sources said.
The hue and cry over proposed imposition of 2 per cent MAT in DTC was debunked by Modi, as he referred the provision to be an endeavour for bringing tax reforms in the country, on the lines of Mexico.
Mexico introduced Minimum Alternate Tax (MAT) system as part of its taxation reform policy in 1990 or 91, and the country ran it for almost 17 years, Modi told the gathering adding, “but later on it lost relevance.”
MAT will become irrelevant in next 7 to 8 years in the country, he added. Over 4.5 lakh companies in India are filing returns, but only 50,000 of them pay taxes today, Modi said. “With the introduction of MAT we can abide to improve the efficiency of Indian companies,” he added.
Slow execution
Commenting on slow pace execution development projects by Indian companies, Modi said “gestation period of projects in India is extremely large as compared to other countries.”
With the introduction of MAT amalgamation and demerger of companies is likely to happen creating more opportunity for the efficient companies, he added.
In regards to no ‘statutory provision’ on tax deducted at source(TDS) in DTC, Modi assured the gathering that the board will look into suggestions on this count and incorporate changes in the code accordingly. Modi also conceded to the demand of panelists of interactive session on introduction of a clause in DTC on allowance for partner’s remuneration or deduction of interest on capital, which was missing in the code.