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India Inc pleased with revised DTC draft

India Inc today said the revised draft of Direct Taxes Code has well addressed its two demands -- tax exemption to pension and provident fund withdrawals and computing the Minimum Alternate Tax on profits.

business Updated: Jun 16, 2010 00:04 IST

India Inc today said the revised draft of Direct Taxes Code has well addressed its two demands -- tax exemption to pension and provident fund withdrawals and computing the Minimum Alternate Tax on profits.

"It is extremely welcomed that the draft Direct Tax Code has very well addressed these two issues," CII Director General Chandrajeet Banerjee said.

FICCI and Assocham too hailed the revised draft and said that the government has accepted the demands for industries.

They asked the government to finalise the draft to enable its implementation by next year.

Tax experts also hailed the provisions of revised draft.

"The revised discussion paper reflects the considerate approach of the Finance Ministry by taking into account and giving due consideration to the recommendations of various stakeholders," said Aseem Chawla, partner with law firm Amarchand Mangaldas.

The revised draft, put for public discussion till June 30, retained the income tax exemption given to provident funds, pension funds at the time of withdrawal.

The first draft, floated last year, drew flak after it proposed to tax these schemes at the time of withdrawal.

The revised draft also retained the computation of MAT on the basis of profits, instead of gross assets.

The earlier discussion paper suggested imposing MAT, which is a tax paid by profit earning firms which do not fall under the tax net due to various exemptions, on the basis of gross assets.

This proposal also evoked strong criticism from the industry.

The government has proposed to bring a bill on DTC in the monsoon session of Parliament and hoped that the new Act, replacing archaic Income Tax law, would be implemented from next fiscal.