Ficci for lowering MAT to 15% in DTC

Industry chamber Ficci today demanded that the MAT rate be cut to 15 per cent of the book profit in the Direct Taxes Code.

Besides, the chamber in its representation to the Finance Ministry on the Direct Taxes Code (DTC) also suggested that all pension schemes be exempted from payment of tax.

"...The rate for MAT (Minimum Alternate Tax) be a specified percentage and in no case more than 50 per cent of the basic corporate tax rate... As the existing corporate tax is 30 per cent, accordingly MAT rate should be 15 per cent," Ficci said in its agenda to the government.

If the corporate tax is reduced to 25 per cent, MAT should be fixed at 12.5 per cent, it added.

While revising the original DTC proposal, the Finance Ministry last month dropped the proposal to impose MAT on gross assets.

MAT, which was introduced to bring non-tax paying companies into the tax net, is currently imposed at 18 per cent of the book profit.

As per the revised code, individuals would enjoy tax exemptions in select savings schemes -- public provident fund, pension schemes, including the government's new pension scheme, general provident funds, recognised provident funds, pure life insurance and annuity schemes.

Ficci in its recommendation said, "All pension funds, which are currently registered with the IT department be covered for the purpose of EEE method instead of restricting it to certain categories."

Under the Exempt Exempt Exempt (EEE) mode, the tax exemption is enjoyed at all the three stages--investment, accumulation and withdrawal.

The other suggestions made by the industry body, including the Special Economic Zone (SEZ) developers, who got approval before DTC became effective, should continue to get the exemptions after the introduction of the Code.

The government last month came out with the revised discussion paper on Direct Taxes Code, which dropped many controversial proposals of the original draft code to help individuals and companies save taxes.

The government had proposed to bring a bill on DTC in the monsoon session of Parliament and hoped that the new Act, replacing archaic Income Tax law, would be implemented from the next fiscal.