BJP opposes Direct Tax Code

Says it will impose a higher tax regime on smaller assessees

GN Bureau | February 3, 2010



The Bhartiya Janata Party is not in favour of the Direct Tax Code (DTC) proposed to replace the Income Tax Act. It urged the UPA government not to hurl the taxpayers from the frying pan to the fire by making sweeping changes.

Its worry is, the small assessees constituting 90 percent of individual taxpayers will end up paying more taxes and the tax officials will get arbitrary powers that may lead to abuse of power and harassment. It called for bringing down the highest tax rate for all individuals, firms and companies from 30 to 25 per cent.

A detailed memorandum submitted by the BJP leaders to Finance Minister Pranab Mukherjee on Tuesday was based on wide internal discussions in the party as also with various stakeholders. It accused the government aping the western and developed economies, ignoring the fact that India was a developing country and the basic philosophy of the code ran counter to its own core values--social, political and cultural.

"In one stroke, some of the fundamental principles, which constitute the core of our current taxation policy and have stood the test of time have been jettisoned" by discouraging savings and capital formation that are so important for social security in view of India having no state-sponsored social security system alike the western countries",the memorandum asserted.

"Another very disturbing and disquieting feature in DTC is the rather thinly veiled attempt to destroy the charitable and religious institutions playing a stellar role in promoting education, health and other social welfare activities," the BJP said, opposing the ground shift in taxing them as "a Machiavellian first step towards reckless commercialisation of education and health, for which these institutions are perceived to be road blocks."

Pressing for continuing current exemption to religious trusts, the party opposed exemption limited to only those trusts or institutions that are registered with government under the religious endowment acts and denying tax deduction to donors of such bodies. A large number of trusts that are not registered under these acts will have to apply for registration which may or may not be granted and may be used as a backhand move to seize control of these institutions, the party leaders asserted.

Pointing out adverse impact on small and middle income taxpayers, the party said the code painted a picture of lower taxes for all, but in practice they will end up paying more because of withdrawal of tax incentives to savings and withdrawal of the fringe benefit tax.

Seeking changes in the tax structure to ensure the small and middle income groups are not adversely hit, the party sought the minimum exemption limit raised to Rs 3 lakh and that for women and senior citizens up to Rs 3.50 lakh and Rs 4 lakh, respectively. It also demanded that valuation of perquisites be rationalised by dropping the proposal to tax leave travel concession and leave salary and levying no tax on reimbursement of expenses.

As regards implications for government employees, it said "the code suffers from the mindset 'one size fits all' by proposing valuation of perquisites such as housing, conveyance etc at market rates. Present taxation norms for government employees need not be disturbed, it stressed.

They stressed on not discontinuing incentives to taxpayers to own or invest in house in order to maintain a sustained fillip to the housing sector and enlarge the scope for even smaller players to invest in housing projects.

Their memorandum also urged Mukherjee to desist from taxing pension, savings in provident fund and life insurance policies to let individuals build their own safety net as the state did not have one unlike the western countries.

Turning to small and medium entrepreneurs, the memorandum says the presumptive tax of 8 per cent on turnover on businesses having turnover up to Rs 1 crore is excessive and need revised to a lower rate by taking a more realistic view. The code exempts them from maintaining regular books of accounts, but they will be compelled to maintain them to justify their turnover is actually below Rs 1 crore.

Opposition leaders in parliament, Sushma Swaraj and Arun Jaitley, led the BJP delegation to the finance minister.

 

Comments

 

Other News

Reopening: Old guidelines extended to November

As the Covid-19 situation continues to improve in India, the ministry of home affairs (MHA) has decided to continue the Guidelines for Reopening, which have already done away with nearly all of Lockdown restrictions in areas outside the containment zones. The MHA issued an order Monday and e

India records lowest new cases in three months

After a scare in September with the number of daily fresh cases inching above 90,000, India seems to have gone down the peak, with several key parameters giving cause for relief just in time for the annual festive season. The new confirmed cases in the 24 hours to Tuesday morning have fallen below 36,500 (

India’s case fatality rate lowest since Janata curfew

The annual festive season has brought good news for India: the country’s case fatality ratio has gone down to touch 1.5 percent, and the number of deaths per day has dipped below 500 in the 24 hours to Monday morning – bringing the situation closer to the number before the lockdown was imposed

“Script is the real hero”

Basking in the success of the new web series, ‘Scam 1992: The Harshad  Mehta Story ’,on SonyLIV, the OTT platform from Sony stable where the lead actors are new faces, NP Singh, MD and CEO of Sony Pictures Networks, has said that the script is the new hero. He credited the s

India’s active cases below 10% of total cases for three days

India’s trend of steadily decreasing active cases continues unabated. The number of Active Cases has remained below 10% of the total cases for the last three days, suggesting only one in 10 cases is active Covid-19 patient. The active cases comprise merely 9.29% of the total positive c

Cabinet clears bonus for non-gazetted employees

The union cabinet chaired by prime minister Narendra Modi on Wednesday gave its approval to pay productivity linked bonus (PLB) for 2019-20 to 16.97 lakh non-gazetted employees of commercial establishments like Railways, Posts, Defence, EPFO, and ESIC, with a financial implication of Rs.2,791 crore.

India Police Virtual Summit and Awards 2020

Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter