Govt to look into concerns on draft Direct Taxes Code
November, 06th 2009
The proposals of the Direct Taxes Code on taxation for salaried employees and income from house property may undergo some changes. Finance Minister Pranab Mukherjee has added these two issues to the list of critical areas in the draft Code for further comprehensive review.
Addressing the newly-constituted parliamentary consultative committee of the finance ministry on Wednesday, Mukherjee said more detailed examination and interaction with stakeholders were throwing up some concerns and the government would make all efforts to meet the aspirations and expectations of taxpayers and the corporate sector before finalising the Direct Taxes Code.
In an interaction with the industry last month, Mukherjee had identified seven areas for re-examination, including the minimum alternative tax (MAT), capital gains tax, double taxation avoidance agreement, general anti-avoidance rule, taxation of charitable organisations and foreign companies in India, and taxing investments at the withdrawal stage, that is EET.
Now, the finance minister has added issues of taxation of income from house property in case of self-occupied property by an individual; and taxation in case of salaried class employees, increasing the number of critical areas to nine.
According to the draft Code, income from a house property, which is not occupied for the purpose of any business or profession by its owner, will be taxed under the head income from house property.
For salaried employees, the draft Code has said that certain deductions in case of retirement benefits would be allowed only if the exempted amount was deposited in retirement benefit accounts.
The next steps in this direction would be taken only after a comprehensive review of the draft Code by taking on board the suggestions received, Mukherjee said, adding he had started discussions within the Central Board of Direct Taxes on the suggestions received so far.
The finance minister said the government was trying to introduce a new taxation regime that could last for another 50 years. Therefore, our endeavour is to see that the new taxation system should include the basic features and time-tested procedures of the existing Act, which have survived judicial security over the years, he added.