India Inc seeks more clarity on DTC Bill before House test
November, 23rd 2013
Even as the Centre pushes for a Cabinet nod to introduce the Direct Tax Code Bill in Parliament, India Inc on Wednesday sought more clarity on some of the clauses and refinement in the Bill.
The DTC Bill, which has undergone several revisions from its first version, would be placed before the Cabinet shortly so that the revised version could be taken up in the winter session starting December 5.
"We are working on the DTC Bill and want to bring it (to Parliament) as soon as possible," revenue secretary Sumit Bose told reporters on the sidelines of a CII summit here.
While speculations are rife that the revised Bill may erase the 35% tax on super-rich and propose a lower corporate tax rate of 25% as compared to the earlier plan of 30% and do away with some of the exemptions, industry experts feel the DTC Bill should clarify on how the profits of a subsidiary unit of a multinational firm should be taxed.
The finance ministry also allayed fears that general anti-avoidance rule (GAAR), which will be part of DTC but effective from 2015, will hurt investor sentiments now that the government has put in place adequate safeguards to prevent its misuse. "GAAR is inevitable. But we should not be afraid of that as invoking GAAR is outside the tax administration and it would be overseen by a panel headed by a judge," said Sunil Gupta, a joint secretary at the Central Board of Direct Taxes.
Still, industry experts said the government should lay down illustrations in the DTC of cases where GAAR will apply and where it won't as it was done by the Shome committee in its report to the government. Also, going by the protracted litigation between the government and Vodafone, some experts feel the government should amend tax laws to give dispute resolution panels (DRPs) powers to negotiate and settle tax cases.
Though the concerns of foreign investors over GAAR has been largely addressed, industry experts point to other clauses in DTC such as those pertaining to place of effective management (POEM) and controlled foreign corporation (CFC) that need clarity