Union Finance Minister Pranab Mukherjee on Wednesday reiterated that the government would take inputs from various stakeholders before giving final shape to the Direct Taxes Code (DTC).
Addressing the second meeting of the parliamentary consultative committee attached to his ministry here, Mr. Mukherjee said that since the issue of direct taxes impinged on the lives of millions of individuals directly or indirectly, the suggestions and concerns raised by committee members during the previous meeting was of great importance in fine-tuning a taxation policy regime to meet the aspirations and expectations of the people, the younger generation and the globalised corporate sector.
The Finance Minister noted that ten major issues were raised and identified during interactions with other stakeholders such as trade and industry representatives, civil society organisations and members of the consultative committee. These included Minimum Alternate Tax (MAT) on gross assets; provisions relating to taxation of foreign companies, residential status of foreign companies — their control and management; General Anti-Avoidance Rule (GAAR); taxation of charitable organisations; shift from EEE (exempt-exempt-exempt) to EET (exempt-exempt-tax) method of taxation of savings; capital gains taxation; taxation in the case of salaried class employees; taxation of income from house property and deduction of interest on housing loans.
Mr. Mukherjee assured members that all these issues were under deliberation and a considered view would be taken on them in due course. The DTC, he explained, was aimed at giving a competitive edge to the country while dealing with international taxation issues. For instance, the code contains a provision for ‘advance pricing agreement’ (APA), a mechanism which has been proposed to bring about certainty and stability in the taxation of cross-border transactions.
The Minister pointed out that the Dispute Resolution Panel (DRP) — already introduced with effect from October 1 this year for disputes relating to transfer pricing — along with APA would provide a fiscal environment conducive for foreign investments in India. Since the trade and industry has been demanding an alternative dispute resolution mechanism for transfer pricing related issues for quite some time, “I am sure these new initiatives already taken and proposed in DTC will check avoidable litigations with resident as well as non-resident tax payers,” Mr Mukherjee said. The Finance Minister emphasised that the DTC should not be compared with the Income-tax Act, 1961, as the attempt was to move forward on the basis of a broad tax base, moderate tax rates, effective implementation strategy and better delivery of services to tax payers.
