Even as the Union Finance Minister is about to come up with the revised direct tax code, the Gujarat-based diamond traders body, Surat Diamond Association has demanded some of the sea-change amendments in the proposed code, which according to sources in the finance ministry, are near to impossible to implement.
The diamond association, which has a membership of over 2000 diamond traders, had put forth its recommendations to the finance minister last week. The letter from the association stated in its demand, the diamond industry has been requesting for a very long time now for the introduction of the presumptive tax module to the level of satisfaction of the industry.
The earlier proposed slab is impractical and this is resulting in a lot of hardships to the tax payers and a lot of hard feelings between them and the Income Tax authorities. We are concerned that there is not even a mention of any initiative in this direction in the proposed Direct Tax Code Bill 2009.
Secondly, the diamond traders body has also demanded to do away with the provisions under Section 139 (1) and 139 (2(f)), which authorizes income-tax official to seize any stock in trade of bullion, precious and semi-precious stone or jewellery, found as a result of such search.
According to the statement issued by the association, there are cases registered in the past when such a law was enforced and stock was seized and there is no solution yet for over 10 years.
Calling this provision in the law as draconian, the association president, Rohit Mehta maintained that the basic purpose of the Direct Tax Code is defeated by the introduction of such law.
However, the finance ministry sources informed CommodityOnline that such a demand from the diamond trading industry regarding search & seizure is near to impossible and if contemplated, will weaken the IT laws and incentivize tax aversion; hence it is least likely to fulfill the demand made by the diamond association with respect to the amendment in the existing tax laws.
But the association argues that the very basic character of the diamond industry makes it impossible to maintain carat to carat or piece to piece inventory. This is one of the main reasons leading to disputes between the industry and the Income Tax officials.