Direct Tax Code Bill 2010
The Indian Finance Minister of India tabled The Direct Taxes Code, 2010 ("DTC") in Parliament for debate and discussion on 30 August, 2010. The DTC will be effective from 1 April, 2012 and not from 1 April, 2011, as had been intended earlier. This gives time to companies to understand the provisions, engage in a dialogue with the Government and, more importantly, restructure their operations as they switch over to taxation under the DTC. Also, this gives time to the Government to gear up its systems to accept and audit additional new compliance requirements imposed on the tax payers.
A number of stringent proposals were brought in the original DTC introduced for debate in 2009. There were several areas of concern. Most of them such as asset based Minimum Alternative Tax ("MAT"), treaty override, etc. were addressed by the Finance Minister through the release of a Revised Discussion paper earlier this year. In substance, the new set of proposals are, by and large, in line with the provisions of current law with major changes on account of anti avoidance provisions and phasing out of profit linked exemptions. A number of areas are subject to detailed guidelines to be framed by Central Board of Direct Taxes ("CBDT") of the Government.