The tax rates mentioned in the draft of Direct Taxes Code are only indicative and the real rates can be decided only by Parliament, finance minister Pranab Mukherjee has asserted on Wednesday.
If somebody assumes that the indicative rates in the Direct Taxes Code is the final rate, it is for them to come to the conclusion. That (tax rates in the draft) is far from reality. What rate of taxes will be there only Parliament can decide. Nobody else, Mukherjee said.
The minister addressing at the Indo-US CEOs Forum in Washigton pointed out that judging the draft code as progressive or regressive is not justified at this point. This is the draft. Therefore, you cannot presume that this is progressive or this is regressive, he said.
The stakeholders had expressed their concerns that have been addressed and the revised draft has been placed before the people, Mukherjee told a news agency rejecting the criticism.
The government has come out with a discussion paper on the Direct Taxes Code that has dropped some proposals in the first draft of the code. The first draft also indicated some rates and tax slabs, which the government has reiterated many a times.
Contrary to the proposal to tax retirement benefits like PF and pension at the time of withdrawal contained in the first draft, the revised document withdrew these taxation proposals. It also reversed the earlier move to levy minimum alternate tax from corporate based on gross assets.
It retained the exemption granted towards interest paid on housing loans, but did not mention the liberalised tax slabs contained in the first draft.
On the issue of tax slabs, revenue secretary Sunil Mitra said the rates in the first draft, which suggested 10% tax on income from Rs 1.60-10 lakh and 20% on income between Rs 10-25 lakh and 30% beyond that, were illustrative.
Mukherjee said the new draft addresses 11 grievances expressed by stakeholders to the proposals in the first discussion paper. The minister had promised in his Budget speech to implement the new direct tax laws from next fiscal.