Ever since we moved to india.advantages.us our readers skiing in from google might not find us that readily. Well on the Direct Tax Code there is not that much an issue as the reportage from ET and mint and the Calvinball on the financial markets (livemint.com/expenseaccount) remain well directed for the lesser than 30 million investor population and banking wannabes, suave bankers, global services professionals and MBAs without a cause all having a fairly consistent opinion including the fairly well versed 3 million strong online investor population in the country. 

Back to the Drawing board

Where we opened yesterday, there was a lot of misgiving as the tax auditors had a field day on the revised elements of the code.The auditors and the CPA fraternity had fun deriding all reformist statements and revisions chaptered in the new discussion as all the exceptions the had lost were reinstated and they could get back to speaking for kicks on how they are suffering immensely from the new DTC which is effectively now, nor a rule based revelation, nor a very long distance from the existing code on the tax front, either in collection or in simplifying and institutionalising reform. As we mentioned yesterday, it is more or less in line with earlier reform measures from this government and we want to focus on the changes on Corporate front.

Saving The Tax Avoidance treaties, and the new IT avatar

The newly drafted rate of 25% as mentioned is all but a mirage. Given that all exceptions that lost the government a quick $17b in tax revenues are back and that MAT is again on a profit base calculation - the question of whether reform is actually required has been raised and laid to rest by our charter of auditors and accountants for a long second innings The SEZ exceptions have given foreign and domestic investment a suitable boost with a lot of the old proposals likely to be revived. The SEZ exceptions can now be suitably grandfathered for past years. Similarily, non profits have been exempted from Wealth tax on unproductive assets and a complete rewrite of non profit tax code has been presented which seems to be effective till the established tax 'auditors' revive earlier borderline arguments and make a mess of it. Elsewhere corporate tax offices have got back express denials of treaty overrides on DTAA and merging of residence definitions with international law allowing those with partly managed / controlled operations from India as resident for calculation of income and liabilities From the assessment of media reports, the said provisos on Capital Gains becoming part of Ordinary income with a 50% discount on long term gains income do leave the market in a soup but are the only surviving hope for the new tax rate of 25%. Even FIIs have been otherwise expressly denied any other treatment of securities income. As part of ordinary income, Capital gains that have been calculated on duration from the end of the financial year in which they have been purchased and which have to mandatorily be held for 12 calendar months to be counted as long term gains, such Capital Gains are now also to benefit from ordinary salary exemptions and those on house interest of 150000. Her's getting back to the dull financial markets, peaceful at last after the continuing vagaries of Europe and everything else from regulation to oil no longr affecting markets or credit flows in the global marketplace.

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