New direct Tax code to simplify procedure and foster compliance
[chennai, 26 August,2009]

Confederation of Indian Industry (CII) in partnership with Ernst & Young organised an "Interactive Session on the New Direct Tax Code" at Chennai today.

The objective of the Session was to create awareness on the various aspects of the new Code, its implications on the economy, Industry and individual and get experts� opinion on issues affecting the corporate sector.

Emphasizing on the importance of the new direct tax code in his keynote address, Mr. V Ranganathan, Tax Partner, Ernst & Young, India said, "The underlying philosophy of the new direct tax code (DTC) recognises the complexity of language and interpretation that has crept into the present direct tax laws over the last nearly 50 years through, innumerable amendments and piecemeal introduction of new provisions. The DTC aims to simplify the language, remove uncertainty in interpretation and mitigate undue litigation. Whilst, most of the provisions in the DTC measure up to these objectives there are some provisions like levy of Minimum Alternate Tax, increase in capital gain tax rates, General Anti-Avoidance Rules, residency of a company and so on, which could have unfavourable impact over businesses and tax cash flow generation. CII along with EY as knowledge partners are organising these seminars across the country to discuss such significant provisions with eminent experts and as an outcome of these deliberations provide concrete and constructive suggestions to the Government."

He further added, "We believe this is the opportune time for India Inc to understand the implications of the DTC and act with alacrity to constructively engage with the Government before some of the ideas translate into law."

Mr. R Anand, Tax Partner; Mr. N Madhan, Tax Partner; Mr. AJ Majumdar, Advisor - Tax Policy Advisory Group; and Ms. Vidya Nagarajan, Associate Director - Tax from Ernst & Young spoke about various clauses of the new Direct Tax Code.

The three technical sessions on Business and Corporate Taxation, Withholding Tax and Non-Resident Taxation, Financial Services and Personal Tax highlighted the implications of taxes such as Gross Asset Tax (GAT), General Anti-Avoidance Rule (GAAR), business transition provisions, salary taxation, taxation on charitable organizations, tax exemption on mutual funds and venture capital funds in addition to others.

Earlier in his opening remarks, Mr S Chandramohan, Co-Chairman, Policy Sub-Committee, CII Southern Region said that the new Direct Tax Code would make the tax law simpler, stable and robust, with elimination of distortion, reducing scope for litigation and fostering voluntary compliance. The new code is expected to come into effect from 1 April 2011 and would replace the existing law relating to Income Tax, Dividend Distribution Tax and Wealth Tax, said Mr Chandramohan.