Indian Finance Minister Pranab Mukherjee on Friday promised a simple and broad-based tax regime within 18 months by lowering tax rates and ensuring better tax compliance and reduced litigation under the draft Direct Taxes Code circulated two months ago for public debate.
After an interaction with the trade and industry chambers here on the proposed new code, he said it would be implemented only after "a comprehensive review" of the views and opinions received from various stakeholders.
A comprehensive legislation based on the draft and seven critical proposals received on it by the government will be brought before Parliament either during the winter session in November or in the budget session in February, said Revenue Secretary P V Bhide who attended the interactive session with Minister of State for Finance S.S. Palanimanickam and senior officials.
"We will try to expedite the process but at the same time we will give adequate time to examine each valid suggestion that will come from the stakeholder because we do not want to commit any mistake in our anxiety to get it done," Mukherjee said. He set the target date of April 1, 2011 to enforce the new code.
He disclosed that seven critical areas emerged for detailed examination from the interactions his ministry had with all stakeholders. These include taxation of charitable organizations and lower rates of Income Tax and Minimum Alternative Tax (MAT) based on gross assets.
Other areas to be examined are: Capital Gains Taxation in the case of non-residents, Double Taxation Avoidance Agreement (DTAA); General Anti-Avoidance Rule (GAAR); effective management control and taxation of foreign companies in India and shift from EEE to EET taxation system.
The last one is based on the recommendations of the Kelkar committee which wanted to end the tax exemption regime for all kinds of investments. It called it EEE which means exempt-exempt-exempt. The committee suggested the shift to EET which is exempt-exempt-tax that will allow exemption at the time of investment but apply taxation on profits from withdrawal of any such investment. staff report