Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: due date for vat payment :: form 3cd :: VAT RATES :: TDS :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: list of goods taxed at 4% :: empanelment :: Central Excise rule to resale the machines to a new company
« Direct Tax »
 Filing tax return before March 31? Here is what you should do and what not
 CBDT invites suggestions to draft new Direct Tax Law
 Deadline For Income Tax Returns Filing Only 12 Days Away. 10 Points
 Income Tax: E-assessment ensures greater efficiency in the taxation system
 10 Points Deadline For Income Tax Returns Filing Only 2 Weeks Away.
 Income tax returns (ITR) filing: A step by step guide to check your ITR status online and offline
 How to save tax; amazing tips to make your money stay in your wallet Income tax returns (ITR) filing
 Want to save tax? Here are the best options
 Suggestion For Option To Assessee For Higher And Lower TDS/TCS For Optimization Of Tax Collection And Refunds
 CBDT to conduct nationwide review of tax collection for FY18 today
 Here are a few last-minute tax saving ideas Not planned taxes yet?

Will the Direct Taxes Code remain a pipe dream?
September, 17th 2012

Finance Minister P. Chidambarams statement that the Direct Taxes Code requires a fresh look perhaps reflects the Governments acknowledgement that the proposed tax code has created uncertainties and disincentives that are not conducive to economic growth. This is not to say that the steep fall in economic growth has been wholly on account of the tax policy.

However, the proposals in the DTC and the changes made to the tax law in the recent past are, arguably, not insignificant contributors to the current environment of falling consumption, savings, investments and capital formation.

The DTC seeks to make far-reaching changes on certain basic concepts such as the meaning of income, persons liable to tax, and the scope and basis of taxation. Apart from unsettling prevailing tax positions, the changes create new uncertainties that will likely increase the tax burden.

A significant rise in the Effective Tax Rate is not only a disincentive to grow and earn but also adversely affects competitiveness and, in turn, earnings. Likewise, it affects new investments, capital formation as also the ability to raise capital and attract talent.
Relevance of MAT

Some provisions in the DTC may be in direct conflict with economic objectives. To illustrate, imposition of MAT (Minimum Alternate Tax) and elimination of MAT credit would reduce competitiveness by increasing the ETR due to double taxation.

There is perhaps no need for MAT anymore as most incentives, except those for the infrastructure sector, have been withdrawn, thereby ending the regime of liberal tax incentives that created a mismatch between tax and book profit.

Also, provisions such as the General Anti-Avoidance Rules (GAAR), Controlled Foreign Company (CFC), and the modified scheme of capital gain taxation could deter private capital formation, reduce savings and divert investments from capital markets. A comprehensive study of such provisions is needed to determine their economic impact.

Certain fundamental questions need to be answered first such as, whether GAAR would deter abusive tax arrangements or also adversely affect investments; whether CFC regulation would deter profit retention outside India or outbound investments themselves, even as regulations have been liberalised to make Indian companies globally competitive.
Wooing foreign investment

Fiscal incentives and a liberal regulatory regime are, in many respects, important policy tools of a government when competing with other countries to attract potential investors. International studies have shown that incentives along with general economic and framework conditions are important in determining the size and quality of investment flows.

Tax incentives can compensate for deficiencies prevalent in a developing economy such as ours, and are often seen as effective policy tools for achieving economic and social objectives. Hence, deterrents in the tax code must not be so excessive, in form or administration, as to render businesses uncompetitive.

Moreover, investors value transparency, simplicity, stability and certainty in the application of tax law and tax administration as equally as, if not more than special tax incentives.
Assessing the impact

The objective of a tax code should not only be the efficient collection of tax revenue but also formulating the Governments tax policy. The evaluation process should be two-fold: Impact on taxpayer and revenue; and economic impact, that is, competitiveness, savings, investments and private capital formation. This is an effective cost/benefit analysis of the change. Also, the change should only achieve what it is meant to and no more.

In the current economic scenario where private capital domestic and foreign is expected to fuel high growth, the quest for higher tax collections must not create an adverse economic impact.

Heavy taxation of productive income is detrimental to private capital formation.

Excessive taxation is not a sustainable solution to budget problems. Also, other jurisdictions should be kept in mind when setting the tax law, as taxes raised to an uncompetitive level can render businesses uncompetitive too.

When taking a fresh look at DTC, a broad-based committee, similar to the recently appointed expert group for GAAR, could bring the needed objectivity to the development of a fiscal legislation that is crucial to the Governments reform process.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Work Flow Workflow Software Software Automation Workflow automation Software Design Workflow Design Business Work Flow Workflow automation tools

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions