The Standing Committee on Finance, which met under the chairmanship of senior BJP leader Yashwant Sinha, has decided to finalise its report by March 2, enabling Parliament to consider the ambitious reforms in direct tax regime.
DTC task force also favoured doing away with Dividend Distribution Tax by suggesting taxing dividends in the hands of shareholders.
To those who ask, "Is all this really worth it? Why can't domestic demand fill the gap?", it is important to remind them that only 13 economies since the Second World War have grown at 7 per cent or more for 25 years -- like India needs to. They all had one thing in common: Strong export growth underpinned by strong global engagement, explains Sajjid Z Chinoy.
However, BJP has not given any assurance of support and conveyed to the Finance Minister that the matter will be discussed within the party and take a call, sources said.
A decision by P Chidambaram in his last days as finance minister has annoyed the revenue department.
The original DTC draft was put in the public domain in 2009 but revised the next year before being presented in Parliament.
It is undoubted that writing a new law based on learning from the experience of half a century is a Herculean task and the taxpayer and tax collector alike require time to acclimatise with a new code.
Years of wait before DTC, GST are rolled out
One key provision is the taxation of indirect transfers when shares of foreign entities change hands.
The government also informed the apex court that it has completed negotiations for Tax Informations Exchange Agreement with 10 countries where the money is believed to have been stashed.
At a press conference on Monday, Finance Minister P Chidambaram said when the final version of the Bill was tabled in Parliament, the government would abide by the recommendations of the parliamentary standing committee on DTC.
Finance Minister Pranab Mukherjee on Monday said the Direct Taxes Code (DTC), which will replace the Income Tax Act, is proposed to be implemented from April 1, 2012."
CBDT sets up committee to detect leakages in tax-exempt sectors.
The panel has proposed lower rates of 10 per cent for annual income between Rs 5 lakh and Rs 10 lakh, 20 per cent for income between Rs 10 lakh and Rs 20 lakh. For income of Rs 20 lakh to Rs 2 crore, the suggested rate is 30 per cent.
With 2014 polls in mind, FM may provide individual tax payers relief despite fiscal constraints.
More developers may withdraw their special economic zones projects, as they lose tax-free status with imposition of minimum alternate tax and further burden through direct tax code, Export Promotion Council for Export-oriented Units and and SEZs said.
Says Finance Ministry is working on tax structures as suggested by the Parliamentary committee
The government has already embarked on strengthening the tax net by sending letters to those who have not filed tax returns.
The Committee, in an earlier report on the Direct Taxes Code (DTC) Bill, had favoured abolition of STT.
'However, to establish a quid pro quo, one can potentially see several things, like whether they got any benefits from the party that they gave money to. That is something that people (of India) will gauge. But to finally establish that there was money paid as consideration, it would require an investigation, a proper investigation, to be able to come up with such conclusions.'
A Parliamentary committee scrutinising the Direct Taxes Code (DTC) Bill will recommend raising of the annual income tax exemption limit to Rs 3 lakh.
A robust dispute settlement system would help the government unlock tax revenues, and also aid ease of doing business.
The Committee headed by senior BJP leader Yashwant Sinha had proposed no tax on income of up to Rs 300,000 per annum; 10 per cent for Rs 300,000-10 lakh (Rs 1 million); 20 per cent, for Rs 10-20 lakh (Rs 1-2 million) and 30 per cent on annual income beyond Rs 20 lakh (Rs 2 million).
The government is likely to ease the incidence of minimum alternate tax, or MAT, on infrastructure companies.
The income-tax department intends to bring individuals under the ambit of the proposed controlled-foreign companies (CFCs).
The panel, under the supervision of the Planning Commission, also turned down the demand for area-based fiscal concessions for Bihar on the grounds that it was not consistent with the proposed reform measures under the Direct Taxes Code and Goods and Services Tax.
On the telecom sector, he demanded auctioning of more spectrum.
The direct tax collections are likely to fall short of the revised Budget target by Rs 650 billion and, in fact, were Rs 150 billion lower than the original estimate for the fiscal
Income Tax department has sought prosecution powers in the proposed Direct Taxes Code for taking effective action against tax evaders.
Suggests far more generous provisions than proposed in Direct Taxes Code
Suggests far more generous provisions than proposed in Direct Taxes Code
No major relief is expected for corporate and individual tax payers.
Mihir Tanna, Associate Director, S K Patodia & Associates, answers your personal income tax queries.
Pledging to alter the policy environment to accelerate economic growth, Prime Minister Manmohan Singh on Saturday promised to address concerns on GAAR and taxation of the IT sector along with giving high priority to finalisation of the Direct Taxes Code and Goods and Services Tax.
Tax experts are hopeful Finance Minister Pranab Mukherjee will increase the income tax exemption limit to Rs 2 lakh (Rs 200,000) per annum from Rs 1.6 lakh (Rs 160,000) to bring the rates in line with the Direct Taxes Code.
The government's proposal to compute minimum alternate tax on profits, and not on assets as planned originally in the direct taxes code, has put a smile on the face of industry.
After comments from the Parliamentary panel, the bill could have been placed in the winter session, and once passed in that session, GST legislation could have been tabled in the Budget session.
'That way you're not hostage just to US sort of exports to India.'
Senior officials in the ministry told Business Standard the rate of taxation would remain the same in the final version of DTC.
