CII Welcomes the New Direct Tax Code
[New Delhi, 12 August,2009] In a statement issued here today, CII has said that the Government needs to be complimented for the endeavour to simplify the law relating to levy of tax on Income and Wealth. The Direct tax Code Bill and the Discussion paper released today is well within the deadline promised by the Finance Minister in his Budget speech on 6th July, 2009. The CII statement said that a glance across the Bill clearly indicates that an attempt has been made to make tax law simpler, stable, robust and also streamline the various provisions in such a manner that there is less scope for litigation and easy compliance.

CII has observed that many of the tax deductions have been done away with. Charitable institutions shall be taxed on the surplus at 15%; Capital gains computation shall be without distinction between short term and long term but in accordance with a defined formula; many businesses have been brought under presumptive tax net; Wealth tax shall be at 0.25% on the Net Wealth at the end of each financial year in excess of Rs.50 crores in the case of Individuals and HUF are all indicative of the unique approach the Bill has followed to simplify the computation and moderate the tax structure. However, there are deeming provisions even in this Bill and CII would need to carefully evaluate the implications thereof, the statement said. For instance, if Rent from House property is less than 6% of the cost of construction of the House property, then the amount so calculated at 6% shall be deemed to be the property income.

The CII statement said that on the whole the language seems to be quite simple and there are not many provisos or explanations that would normally complicate the understanding of the law. Taxpayers can certainly find more reasons than one to welcome this Bill.