Uncertainties in new tax code may hit fund inflows: Deloitte

Uncertainties in the government's proposed Direct Tax Code (DTC) may affect the foreign fund flows into the Indian market and these need to be resolved in time, a top industry official said.

"There are a lot of uncertainties (in the DTC) to be resolved. We hope the government will clear the doubts before the implementation, which, otherwise may even affect the FDI and FII flows," Deloitte Haskins & Sells Partner Samir P Gandhi told PTI here.

The proposed tax code, currently being discussed among the market participants and policymakers, is expected to be implemented by April 2011.

At present, during cross-border deals lack of clarity on pricing and related tax issues create confusion among foreign investors, which needs to be rectified, Gandhi said.

"What the companies need is clarity, which we lack in many issues. Currently, in India, legal disputes in tax- related matters take a long time to resolve," he said.

The DTC is expected to bring far-reaching reforms in the country's tax infrastructure, including Advanced Price Agreement (APA) in transfer pricing, which would help firms to have understanding with the government on the pricing aspects.

"The APA will help the companies and the government to sit and discuss the price in advance. These agreements will have validity up to five years," Gandhi said.