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DTC panel to submit its report to government today

A day before the direct tax code (DTC) panel is expected to submit its report to the government, experts are anxious to see it providing for a cut in corporate tax rate to 25% across the board which would also eliminate the need to apply minimum alternate tax (MAT) on companies. Further, they hope the DTC would bring about radical changes to reduce litigation and cut the cost of doing business in India.

After a delay of over a year due to retirement of the then chairman of tax panel for drafting DTC, Akhilesh Ranjan, the current CBDT member would submit the report to the government on Wednesday. Although he has earlier said that the code to replace 58-year law would largely deal with simplification of language, tax experts hope that it would also bring much needed changes to the direct tax regime.

“The total tax rate should be low enough to be comparable to competition countries in the world, i.e. no more than 25%. The various surcharges and cesses complicate, make the tax assessment very complex and unfavourable. They also distort the tax rate,” said Daksha Baxi, head of international tax at Cyril Amarchand Mangaldas.

Amit Maheshwari, partner at Ashok Maheshwary & Associates said that tax rates should be cut down across the board. There is no reason for LLPs to be taxed at a higher rate. Export linked incentives/exemptions should be reintroduced. There should be higher tax deductions on generating employment. Taxation of capital should be ended which means capital gains on sale of securities should not be taxed. MAT and DDT should be eliminated.

Another major issue that the stakeholder is the litigation management by the department. Over Rs 10 lakh crore is stuck in cases, some of which have been running for over 10 years.

However, he said that DTC should allow for tax exemptions to exist contrary to the government stand over the last five years, which has been reducing tax rates but also phasing out exemptions.

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