Govt to address tax code concerns

New Delhi, Oct. 9 -- Finance Minister Pranab Mukherjee on Friday promised to examine the critical proposals of the direct taxes code (DTC), the contentious issues of taxation of savings schemes and imposition of Minimum Alternate Tax (MAT) on gross assets.

The new Direct Taxes Code, the draft of which was put up for public debate in August, has proposed to bring down the corporate income tax rate to 25 per cent from 34 per cent at present. It also proposed to abolish the securities transactions tax.

The code, which is slated for introduction by April 1, 2011, has proposed major changes for computing MAT from 'book profits' to 'gross assets.'

The rate of MAT proposed is 0.25 per cent for all companies - except banking. The proposal, however, did not find favour with industry.

"It represents a shift from profit-based taxation to asset based taxation, which is not line with international taxation practice," said Harshpati Singhania, president, FICCI.

Confederation of Indian Industries President Venu Srinivasan also echoed similar views and urged the government to change the provisions.

Mukherjee said the government has identified seven critical areas on the code for further detailed examination.

"We want to present the stakeholders with a tax regime which is simple and broad-based leading to lowering of tax rates, better tax compliance and reduced litigation," he said.

Earlier in the day, addressing industrialists at the annual meeting of industry chamber Assocham, Mukherjee said a robust domestic demand will be key to withstanding the shocks and uncertainties that come with a global economy.