Finmin defends new DTC draft,says basic objectives retained

News posted by www.newsinfoline.com

New Delhi, June 18 (PTI) Amid criticism that the revised Direct Taxes Code (DTC) draft has watered down the intended reforms, the Finance Ministry today said it has not moved away from the overall philosophy of simplifying the Income Tax Act. "We have never stated that we have moved away from the original purpose of the Direct Taxes Code.The basis of reform is to simplify the (Income Tax) Act.The objective has not been changed at all. Things are on the same track, guided by the same philosophy. We have given you only 11 things," Revenue Secretary Sunil Mitra told reporters here. The revised DTC draft has dropped the contentious issues of the first discussion paper--imposing tax on provident and pension funds at the time of withdrawal, imposing minimum alternate tax on the basis of gross assets of companies, and withdrawing income tax rebates on the interest payment of homeloans. When asked what will be the revenue implications of the changes, Central Board of Direct Taxes chairman SSN Moorthy said it can only be calculated once the new tax rates are known, which will be out only at the stage of legislation. The DTC Bill is slated to be tabled in the forthcoming monsoon session of Parliament. The new draft addresses 11 grievances expressed by stakeholders to the proposals in the first discussion paper. Certain quarters dubbed it as compromising with the reform objectives contained in the first discussion paper. "We changed the first discussion paper after carefully assessing the feedback received, taking the larger picture into account and after seeing that the interests of the government will not be sacrificed, and not because of pressures," Mitra clarified. Many have criticised the changes proposed in the revised draft in respect of minimum alternate tax (MAT) as buckling under the pressure of the industry. The revised draft retains the current position of imposing MAT on the basis of profits, and not gross assets as was suggested in the first discussion paper. MAT is a tax imposed on profitable companies which do not fall under tax net because of various exemptions. Mitra said the Income Tax Act has become complex because of various amendments made to cater to the needs of a changing society. "Its implementation is creating problem. Life is difficult for both taxpayer and tax collector. So the basis of reform is to simplify the Act. There will be convenience for both the sides," he said. When asked about the rationale for having only a few exemptions, Mitra said, "so far as the exemptions are concerned, they have to be taken out progressively in a phased manner. There is no change in the thinking." The revenue department officials explained that the income tax rates will form part of the Schedule in Direct Taxes Code, and if they are to be changed it has to be done by making changes in the Schedule. This gives an option to the government not to move the Finance Bill in Parliament, if it wants to retain the existing tax rates. Currently, the government has to move the Finance Bill, even if it wants to retain the rates.

News posted by www.newsinfoline.com

Click here to read more news from www.newsinfoline.com
Please follow our blogs

newsinfolinephotogallery
prabugallery
newsinfolinephotogallery1

photogallery1