New Delhi, Dec 16 (Inditop.com) Finance Minister Pranab Mukherjee Wednesday said the initiatives taken and proposed in the new direct tax code (DTC) will check avoidable litigations with resident as well as non-resident tax payers.
Addressing the Parliamentary Consultative Committee of the finance ministry here, Mukherjee said the subject of direct tax touches directly or indirectly the lives of millions of individuals in the society.
“So the suggestions and concerns raised by the committee, who are also the representatives of the people is of great importance in finally shaping out a policy relating to taxation regime in India,” he told the members.
Mukherjee was addressing the second meeting of the Parliamentary Consultative Committee on the DTC. The committee had earlier met Nov 4. The DTC is expected to come into force only by 2011.
The finance minister assured the members that the above identified issues are under deliberation and a considered view would be taken on these issues.
He said efforts are being made to ensure that the DTC would provide an environment conducive for foreign investments besides making it to the aspiration and expectation of the younger generation and also of the globalized corporate sector.
He said the government will take inputs from various stakeholders before giving final shape to DTC.
The finance minister stated that the important issues which have been raised during interaction with other stakeholders include minimum alternate tax (MAT) on gross assets, provisions relating to taxation of foreign companies, residential status of foreign companies – their control and management and other issues concerning General Anti-Avoidance Rule (GAAR) and taxation of charitable organisations.
Others issues include capital gains taxation, taxation in the case of salaried class employees, taxation of income from house property and deduction of interest on housing loan.
Tax experts fear that the tax burden on assesses in the category of income from Rs.3 lakh to Rs.10 lakh annually may actually increase. The direct tax code ostensibly places the consumers in the income of Rs.1.6 lakh to Rs.10 lakh in the 10 percent bracket.
Allowances such as HRA (house rent allowance), EPF (employees provident fund), deductions, medical, LTC (leave travel concession), leave encashment are entitled to a certain category of exemptions. Now all will get added to the income and hence become taxable, a representative of the opposition party Bharatiya Janata Party (BJP) said addressing a seminar organised by the Confederation of All India Traders last month.
