New Delhi: Finance Minister Pranab Mukherjee on Friday promised to examine in detail seven critical proposals of the Direct Taxes Code (DTC) which include taxation of savings schemes and imposition of Minimum Alternate Tax (MAT) on gross assets before finalising the draft.
The other DTC proposals, which would be scrutinised by the ministry, deal with Capital Gains tax on NRIs, double taxation avoidance agreements, taxation of foreign firms and charitable organisations, the Minister said in an interactive session with the representatives of trade and industry.
On the schedule for implementation of the DTC, the Minister said it would be implemented only after "a comprehensive review" of the proposals.
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. At present, several savings scheme like PPF are under the EEE (Exempt Exempt Exempt) mode -- wherein tax exemption is enjoyed at all stages whether investment, accrual or withdrawal.
As regards MAT, the DTC proposed to impose minimum tax on the gross assets of a company instead of the gross profit. The proposal, however, did not find favour with industry.
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 stable fiscal eco-system and have well regulated free markets," he said.
The Minister further said the new draft direct tax code has received good feedback from all stakeholders and has generated "intellectual debate".
"We are receiving thoughtful feedbacks on our website and through other means—trade and industry associations, professional bodies and others," he added.
Minister of State for Finance SS Palanimanickam, Revenue Secretary P V Bhide and senior officers of the Finance Ministry were also present in the interactive session.
The Government has put the draft direct tax code for public discussion. After enactment, the code will replace the archaic Income Tax Act and other related direct taxes legislations.