The government will introduce the Direct Taxes Code by April 2011 after examining thoroughly seven proposals such as taxing savings schemes and clamping the Minimum Alternate Tax (MAT) on gross assets that have not found favour with the industry, trade and people at large.
After an interaction with industry chambers, Finance Minister Pranab Mukherjee said, "The new Direct Taxes Code would have to be passed in the Parliament. It is to be effective from 2011."
He said the Code would be implemented only after "a comprehensive review" of the proposals. Revenue Secretary P V Bhide said, "The draft would be tabled in the Parliament during the winter session or the following session in February."
The other DTC proposals, which would be scrutinised by the finance ministry, deal with capital gains tax on NRIs, double taxation avoidance agreements, taxation of foreign firms and charitable organisations, Mukherjee told the trade and industry representatives.
The DTC proposed to bring all savings schemes under an EET (Exempt Exempt Tax) taxation system, which would require people to pay tax at the time of withdrawal of money.
The DTC proposes to impose minimum alternate tax on the gross assets of a company instead of the gross profit. The proposal has not found favour with the industry.
Industry bodies FICCI, CII and Assocham have also raised concern over various other provisions in the proposed Direct Taxes Code like taxation of non-resident companies and anti avoidance rules.
Mukherjee said the government would make sure that the expectations and aspirations of tax payers are met in the new tax system.
"It has been the endeavour of the government to incorporate the best practices (in the DTC) prevailing across the globe and to use innovative methods for attaining equity - vertical and horizontal -, ensure growth with sustainability, create a stable fiscal eco-system and have well-regulated free markets," he said.
