also a view that the government might wait till a formal position is taken on the DTC before CFC and BPT concepts are introduced.
The industry wants the scope of CFC provisions to be narrower, limited to one level of overseas subsidiaries and credits to be allowed on the taxes paid by the foreign subsidiary abroad. DTC had proposed a 15% BPT in lieu of a reduction in income tax rate for foreign companies from 42% to 30%.
Chidambaram’s advisor Parthasarthy Shome had said last week that the ministry would increasingly follow the approach of looking at contentious tax matters from a global perspective, even as New Delhi strives to revive investor sentiment. Chidambaram on Tuesday urged his officers to follow a friendly approach, which would enhance tax compliance. “As we go forward, we should rely more on technology, non-intrusive intelligence gathering and a non-adversarial tax administration,” Chidambaram said while addressing officials of Central Board of Excise and Customs (CBEC) here.
The finance minister also has to make dispute resolution mechanisms more effective. Experts said some of the existing provisions such as the Mutual Agreement Procedure, under which tax authorities from different countries come together to agree for an understanding to avoid double taxation of companies present in all the countries, have not yet been effective due to the alleged unwillingness of India to make compromises.
“We are trying to see what would be the best in terms of transparency, facilitation in terms of returns so that some of the issues that are bothering the industry will be covered,” Shome had said last week.