PIB Press = Release

Government would = make all=20 efforts to meet the aspirations and = expectations=20 of the taxpayers = and the=20 corporate sector before finalisation = of the=20 Direct Tax Code. = The next=20 steps in this =20 direction = would=20 be taken only after = a=20 comprehensive review of the draft Direct Tax Code by taking on = board the=20 suggestions received. = This=20 was stated by the Finance Minister, Shri Pranab Mukherjee=20 while addressing the first newly constituted Parliamentary = Consultative=20 Committee attached to his=20 ministry here = yesterday. He said we are trying to = bring the=20 new taxation regime, which can last for another 50 years. Therefore, our endeavor = is to see=20 that new taxation system should include the basic features and = time tested=20 procedures of existing act, which have survived judicial security = over the=20 years, he added.

Shri Mukherjee said that he has started = discussions within=20 the Central Board of Direct Taxes on the suggestions received so = far. The outcome of the = discussion=20 would be used for modifying the proposals contained in the draft = Direct=20 Tax Code.

The Finance Minister = said=20 while the initial reaction has been very encouraging, more = detailed=20 examination and interaction with stakeholders is throwing up some = areas of=20 concern. On the = basis of=20 interactions with the stakeholders, Government has identified = nine=20 critical areas for further detailed examination. These relate to (i) The=20 concept of Minimum Alternative Tax (MAT) based on gross = assets; (ii) Capital Gains = Taxation in the=20 case of non-residents; (iii) The Income Tax Act and the Double = Taxation=20 Avoidance Agreement (DTAA); (iv) General Anti-Avoidance Rule = (GAAR); (v)=20 Issues relating to effective management control and taxation of = foreign=20 companies in India; (vi) Taxation of charitable organizations; = (vii) Shift from=20 EEE to EET taxation = system; (viii)Taxation of income = from=20 house property in case of Self-Occupied Property (SOP) by the = individual;=20 and (ix) Taxation in case of salaried class=20 employees.

Shri. Mukherjee informed the meeting that the = draft Tax Code=20 has following new features:

(i) = ; =20 The rate of slabs = for personal=20 income tax in the case of individuals are as = under:

Rs. 1.6 lakh to Rs. 10 lakh

10%

Rs. 10 lakh to Rs. 25 lakh =20

20%

More than = Rs. 25 lakh =20

30%

This proposed slab = rates for=20 personal Income Tax would put more money in the hands of=20 consumers;

(ii) = ; =20 The rate for = Corporate tax for=20 companies is 25%;

(iii) = ; =20 Proposal for advance = pricing=20 agreement in respect of arm=92s length in relation to an = international=20 transaction. The = Advance=20 Pricing Agreement (APA) will provide = certainty in=20 cross border transactions with taxpayer and it will facilitate in=20 investments in India. Industry has been = demanding for=20 introduction of APA in=20 India for quite some = time. This proposal is in line = with the=20 best global practices adopted by many countries across the=20 globe.

(iv) = ; =20 Rationalization of = deductions=20 and exemptions for streamlining the administrative processes and = also to=20 reduce the rent seeking behavior and

(v) = ; =20 Proposal for General = Anti=20 Avoidance Rules (GAAR) to check the treaty misuse by the third = party=20 residents.

Shri. Mukherjee said that it has been our endeavour to incorporate the best practices = prevailing=20 across the globe and to use innovative methods for attaining=20 equity=97vertical and horizontal, ensure growth with = sustainability, create=20 stable fiscal eco-system and have well regulated free markets in = the Draft=20 Tax Code. We want to present the stakeholders with a tax regime = which is=20 simple and broad based leading to lowering of tax rates, better = tax=20 compliance, reduced litigation certainty and stability in taxation = system,=20 added the Finance Minister.

The meeting was = attended by=20 S/Shri Shantaram Naik, Rahul = Bajaj, Rajeev Chandrasekhar, Sabir Ali, Mukut = Mithi, Rajeev Shukla, N.K.=20 Singh, and Tariq Anwar=20 - members of Rajya Sabha = and S/Shri=20 Narahari Mahato, Partap=20 Singh bajwa, Bhausaheb=20 Rajaram, =20 Vijay Inder Singla, Mukesh = B. Gadhvi, Arvind = Kumar Chaudhary Natubhai=20 Gomanbhai Patel, Suresh C. Angadi, Prabhat=20 Singh Chauhan, T.R. Ballu, and Smt.=20 Rajkumari Ratna Singh=20 - member of Lok Sabha. =20 Minister of State for Finance Shri S.S. Palanimanickam, Revenue Secretary, = Expenditure=20 Secretary, Disinvestment secretary and other senior officers the = ministry=20 attended the meeting. =20

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BSC/KP/366/09