New Delhi: The Direct Taxes Code (DTC) Bill, which seeks to overhaul the 50 year-old Income-tax laws, will be brought in Parliament in the monsoon session and most of the recommendations of the Standing Committee will be accepted.
Finance Minister Pranab Mukherjee stated this in the Rajya Sabha on Tuesday as he moved the Finance Bill, 2012 for consideration and passing. It has already been approved by the Lok Sabha.
"I will have the opportunity after the Budget session is over, to go through all the recommendations (of the Standing Committee) and thereafter approval of the Cabinet, in the next monsoon session bring the DTC bill for approval of the both the Houses," Mukherjee said.
"...And that stage many of the recommendations of the standing committee will be accepted," he said.
The minister said he could not go through the all the recommendations the Standing Committee on DTC as the report was given on March 9 and Finance Bill presented on March 16.
"...Therefore it was quite natural that I could not take into account all major recommendations on the DTC," he said.
The DTC Bill will have far reaching consequences on the income tax laws in the country as it replace the Income-tax Act, 1961.
The Parliamentary Standing Committee on DTC, headed by senior BJP leader Yashwant Sinha, in its report had given a number of recommendations, including raising income tax exemption limit to Rs 3 lakh from Rs 1.8 lakh now.
Mukherjee ruled out reopening of cases where assessment orders have been finalised following retrospective amendment in laws related to taxation of overseas deals involving Indian assets.
Other recommendations of the panel on DTC Bill include hiking the investment limit for tax savings schemes to Rs 3.20 lakh and pegging wealth tax limit at Rs 5 crore. It also recommended abolition of the STT. As regards the corporate tax, it, recommended that the rate be retained at 30 percent.
Mukherjee also announced a slew of measures to provide relief to the jewellery sector and postponed implementation of the general anti-avoidance rules (GAAR) by a year.
The government has decided to withdraw the levy of one per cent excise duty on all precious metal jewellery, branded or unbranded, with effect from March 17, 2012, he announced, bowing to demand within and outside the House.
The Finance Minister said the threshold limit for tax collection at source (TCS) on cash purchase of jewellery will be raised to Rs 5 lakh from the present Rs 2 lakh.
As regards the GAAR, which has evoked sharp criticism from foreign investors, he said that with a view to providing more time to both tax payers and tax administration to address all issues, the applicability of the GAAR provisions has been deferred by one year.
It will now apply to income of financial year 2013-14 and subsequent years, he said.
At the same time, Mukherjee said he proposed to make some amendments to the GAAR provisions, including appointment of independent member in the GAAR panel and permitting investors, domestic and overseas, to seek ruling from the Authority for Advance Ruling (AAR).
Mukherjee said that clarificatory amendments to the tax laws do not override the provisions of the Double Taxation Avoidance Agreement (DTAA) which India has with 82 countries.
The Finance Minister said that retrospective amendments to the Income Tax Act will not be used to reopen cases where assessment orders have already been finalised.
In order to provide depth to capital markets through listing of companies, the Minister proposed to extend the benefit of tax exemption on long term capital gains to sale of unlisted securities in an initial public offer.
As regards the levy one per cent Tax Deduction at Source (TDS) on transferee of immovable property (other than agricultural land), Mukherjee announced withdrawal of the budget proposal.
On the controversial and harsh proposal of making certain offences under the customs and central excise laws as cognisable and non-bailable, he proposed to omit the provision entirely.
Only serious offences under the customs law involving prohibited goods or duty evasion exceeding Rs 50 lakh would be cognisable, he said.