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Revised Direct Tax Code Analysed
On 15 June 2010, the Government of India released the Revised Discussion Paper on the Direct Taxes Code ("DTC"). While retaining the basic philosophy and object of the DTC, the Paper seeks to address eleven key issues that were raised by the stakeholders following the original draft released in August 2009. Taxand India examines the DTC and the details of the new proposal.
The public have been invited to comment on the revised paper up till 30 June 2010. The detailed DTC is then expected to be tabled before Parliament in the monsoon session. The Government is committed to introducing the new DTC into effect in April 2011.
The new proposal deals with the same key provisions in the first proposal, including, gross assets taxation, treaty override provisions, capital gains taxation, tax holiday for SEZ units, EET scheme of taxation for tax savings instruments, and general anti-avoidance rule provisions. In some aspects the original proposals have been diluted whereas on other issues, the Government has held its ground.
The interim efforts of the Government to retain the spirit of the original draft DTC, while at the same time rationalising some of the proposals, is encouraging. The approach of the Government to place the revised policy paper in public domain before drafting the legislation is also laudable.
The Revised Discussion paper is open for public comments for fifteen days, until 30 June 2010, after which the revised DTC Bill will be placed before the Parliament. While not much change is expected on the Government's position on these key issues, a more comprehensive analysis of the implications can only be done once the Bill is released.
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