'Tax Code an attempt to make CBDT toothless'

Critical of the draft Direct Tax Code (DTC), a section of senior revenue service officers have said that it was an attempt to make Central Board of Direct Taxes (CBDT) toothless.

The officers, mostly from Income Tax department in Mumbai, said that the DTC has recommended removing powers of the CBDT to issue notificationsor circulars or even bringing in amendements.

The officers, who did not want to be named, alleged that those who drafted the Code had some ulterior motives in diluting the powers of the Board.

CBDT recieved several suggestions from stake holders time to time and the Board would not be able to implement them if powers to bring in amendements, notifications and circulars were taken away, the officers who included Chief Commissioners and Comissioners said.

They also regretted that the Board, which is repsonsible for mopping up direct tax revenue, has been kept away from the process of preparing the Dircet Tax Code.

The proposed code, which is to be implemented from April 1, 2011, claims that one of its purposes was to remove economic inefficiency, but it, in fact, introduces many contradictions, making it difficult to administer.

Citing some of the contradictions, they said that Section 3 (1) (a) of the code includes income of a resident that has accrued to a resident outside India.

But item 29 (a) (i) of the Sixth Schedule excludes income accrues to individual outside India from the total income, thereby excluding income of both resident and non-residents that has accrued outside India.

Similarly, Section 3 (1) (d) of the Code includes income of a resident that is recieved by him outside India, whereas item 29 (a) (ii) of Sixth Schedule of the Code excludes income of an individual received outside India. These indicate that there was a serious conflict in provisions.

Though Security Trnsaction Tax (STT) is abolished, it finds its place in item 2 of the Ninth Schedule.

The scope of total income has been expanded to include income received by a resident outside India, whereas in the earlier code, income accrued or arisen to him outside India is taxable.

The adoption of Exempt-Exempt-Taxation (EET)for saving schemes would hit all the employees hard at the time of their retirement, they said.