The Parliamentary Standing Committee on Finance has sought the finance ministry’s response on the suggestions of both stakeholders and the panel in a tabular format on the Direct Taxes Code (DTC) Bill provisions before it finalises its report.
A member of the panel said the ministry was expected to report back by this month-end. If the response was convincing, the standing committee might look at the possibility of giving its report by the end of the winter session of Parliament, he told Business Standard.
The ministry had been asked to provide — at one place — a comparison of the points raised on the DTC proposals with the existing provisions in the Income Tax Act, and their response to the suggestions.
The standing committee members hae raised certain areas of concern. They include the proposed hiking of exemption limit to Rs 2 lakh in 2012-13 and a no-special treatment for women in the DTC Bill.
The senior-senior citizen category had also been created, but there was no specific benefit to this segment also in DTC, said the member. Various benefits available to the salaried class had also been taken away.
A number of questions “still remain unanswered” and in some cases. What’s more, the income tax department’s answers “has led to more queries”. The law may have become simple, but it has “also become more cumbersome”.
The member further said that the present Income Tax Act gave area-specific concessions, but DTC had removed it. Now, incentives had been linked to investment in DTC. “This will lead to widening of disparity. Weaker states would suffer and rich states would benefit,” he added.
Further, the definitions associated with transfer pricing and also NRIs and foreign subsidiaries of Indian companies were “not very clear”, said the member.
Though it looked difficult that the Standing Committee report would be ready to present in the winter session, the outcome would depend on the finance ministry’s response, he added.
Finance minister Pranab Mukherjee has indicated that the government would try to stick to the deadline for implementation of DTC from April 2012 with the expectation that the standing committee would give its report in the winter session.
The annual I-T exemption limit is proposed at Rs 2 lakh in the DTC Bill compared to Rs 1.8 lakh at present. Under the Bill, the government proposes to widen tax slabs to levy 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-10 lakh and 30 per cent above Rs 10 lakh.
Currently, income up to Rs 1.8 lakh per annum is exempt from tax for individuals. For women and senior citizens, the limit is Rs 1.9 lakh and Rs 2.5 lakh, respectively. The tax is levied at a 10 per cent rate on income between Rs 1.8 lakh and Rs 5 lakh, 20 per cent on Rs 5-8 lakh and 30 per cent above Rs 8 lakh.
