House panel defers decision on direct tax code bill report
February, 13th 2012
The recent judgment of the Supreme Court quashing the Income Tax departments demand of Rs 11,000 crore from Vodafone has cast its shadow on the Direct Tax Code (DTC) Bill. The bill seeks to replace the current Income Tax Act with new systems, removing exemptions and making the tax administration
The parliamentary standing committee on finance on Friday postponed the adoption of its report on the bill that would have paved its passage in Parliament.
Many members felt that the DTC bill should take into account the recent SC judgment and make suitable amendments to the tax law to ensure that corporates pay taxes even if they strike merger and acquisition deals in overseas tax havens.
The SC had set aside a Bombay High Court verdict on Vodafones purchase of mobile assets in India citing that the government has no jurisdiction over a transaction that took place in Cayman Islands between HTIL & Vodafone.
BJPs Surinder Singh Ahluwalia, CPIs Gurudas Dasgupta and BJDs Bhartrubhari Mahtab raised the issue during the meeting. Members also felt that there is a need to look at expanding the tax-base and its better enforcement while implementing new tax law. The committee will meet again on February 17, 24 and March 2.
Finance minister Pranab Mukherjee had tabled the DTC Bill in Lok Sabha in August and was referred to the standing committee for scrutiny.
The report has suggested categorisation of the home and commercial property for the purpose of I-T. The income from these two sources should be accorded different tax treatment, it said.