The critical reform Bill on Direct Taxes Code may get delayed further, as it has not been placed in the list of the Bills scheduled for consideration and passage during the Budget Session starting on Thursday.
Just last month the Finance Ministry had highlighted the ‘Direct Taxes Code’ as a policy reform, unveiled during road-shows in Singapore and Hong Kong. The road-shows were meant to attract foreign investment. The Bill was introduced in Lok Sabha on August 30, 2010 and was referred to a Standing Committee on September 9, 2010. After detailed examination and hearing views from various stakeholders, the Standing Committee on Finance, chaired by former External Affairs and Finance Minister Yashwant Sinha submitted its report to the Lok Sabha Speaker on March 6, 2012, which was subsequently presented to Lok Sabha and laid in the Rajya Sabha on March 13, 2012.
Apart from various recommendations, the Committee suggested raising the income-tax lower slab to Rs 3 lakh from Rs 2 lakh, which is also the current structure as well as proposed in DTC Bill. It did not recommend any change in the proposed rate of 30 per cent corporate tax for companies. It also made a suggestion to raise the minimum threshold for wealth tax to Rs 5 crore.
These recommendations are not binding on the Government and the Bill is free to move to Parliament for consideration and passage, with or without amendments. However, to garner wide support, the Government is considering some amendments and will obtain Cabinet approval.
It may be recalled that on January 31, Advisor to the Finance Minister Parthasarathi Shome had said that the Government would come up with a modified Direct Taxes Code (DTC) Bill after incorporating the suggestions of the Standing Committee.
Earlier, there was a thinking that the new tax system would come into effect from April 1, 2013. But, last year, Finance Minister P. Chidambaram indicated that the Government might not be able to keep this date.
On August 28, 2012, when he was asked about it, he had said, “I can’t say. DTC has gone through various versions.”