Though finance minister Pranab Mukherjee is keen to table the Direct Taxes Code in Parliament in the forthcoming Winter Session, chances are that it could take quite some time before the proposed Bill is ready to be introduced in the Lok Sabha.
This is because the finance ministry is still in the process of interacting with trade and industry on the Draft Direct Taxes Code. But more importantly, it is yet to be sent to the law ministry for approval?a process, which can take at least a month.
Any proposed legislation has to be vetted by the ministry of law and justice, to ensure that it is not against the principles of the Constitution. The Bill is then sent to the Cabinet for approval after which it is ready to be introduced in Parliament.
?The Draft Direct Taxes Code will be sent to the law ministry after it is reviewed and given a final shape. It?s unlikely that all this can be done before the Winter Session. Even introducing the Bill in the Budget Session early next year could prove difficult,? a senior government official told FE.
Timely introduction and passage of the Direct Taxes Code in Parliament is essential as it is scheduled to come into effect from April 1, 2011. To this end, revenue secretary PV Bhide had said last week that it would be tabled in Parliament either in the Winter Session or the session after that. Mukherjee too has indicated the same but has also said that it would be introduced after comprehensive discussions.
North Block officials have already held discussions with trade and industry representatives in Bengaluru and Delhi and are scheduled to have such meetings in four more cities. The code will have to be reworked and at least some of their concerns are addressed.
Mukherjee last week has already announced that the finance ministry will review provisions in seven core areas of the code. These include clauses relating to minimum alternate tax, EET regime for savings; capital gains taxation in the case of non-residents; the Income Tax Act and the double taxation avoidance agreements; General Anti-Avoidance Rule; issues relating to effective management control and taxation of foreign companies in India, and taxation of charitable organisations.