The Centre would give special provisions for infrastructure, start-up companies and firms with long gestation period while fixing taxes on the asset value under the new direct tax code (DTC), said PV Bhide, revenue secretary, Ministry of Finance.
Interacting with the media here on Thursday on the DTC, which will replace the existing Income Tax Act from April 2011, he said the government was seeking feedback from the industry on the draft DTC and was open to relooking at issues relating to minimum alternate tax (MAT), capital gains tax, double taxation avoidance agreement, general anti-avoidance rule, taxation on charitable organisations, foreign companies and investments at the withdrawal stage.
“The government would consider societies and trusts that depend on government funds, which often come in March, as special cases and make provisions for them,” he said. The DTC has not touched religious, educational and medical trusts and societies. However, other societies, like road transport corporations, that operate for profit would have to pay tax according to the prevalent tax rates.
Besides, the DTC has not altered the SEZ provisions and there is no effort to stop the incentives for investments, he said.
“The objective of DTC is to bring in a tax regime that is simple, broad-based with lowered tax rates and is easy to comply with less litigations,” he said.
Bhide said though the FII activity would slacken in the initial days, they would continue to invest in Indian markets after factoring in the tax rates. The DTC envisages to strengthen the dispute redressal mechanism.
