Direct taxes code to give India an edge: FM

Finance Minister Pranab Mukherjee today said the proposed Direct Taxes Code would give an edge to the country while dealing with international taxation issues.

The code has a provision for advance pricing agreement (APA), which has been proposed to bring certainty and stability in taxation of cross-border transactions.

The Dispute Resolution Panel (DRP), already introduced with effect from October 1 for disputes relating to transfer pricing along with APA, would provide a fiscal environment conducive for foreign investments in India, Mukherjee said at a meeting of the Parliamentary Consultative Committee.

Trade and industry bodies have been demanding an alternative dispute resolution for transfer pricing issues for quite some time. “I am sure these new initiatives, already taken and proposed in the Direct Taxes Code, will check avoidable litigation with resident as well as non-resident tax payers,” added the minister.

The finance minister emphasised that the Code should not be compared with the Income-tax Act of 1961, as the attempt was to move forward on the basis of a broader tax base, moderate tax rates, effective implementation strategy and better delivery of services to the tax payers.

This was the second meeting on the issue of the Direct Taxes Code.