BJP bats for Corporate India in opposing proposed MAT

The Bhartiya Janata Party,the main Opposition party,today said the draft Direct Tax Code was harsh on small taxpayers and traders...

The Bhartiya Janata Party,the main Opposition party,today said the draft Direct Tax Code was harsh on small taxpayers and traders and asked Finance Minister Pranab Mukherjee not to implement the Code in its existing form.

A delegation led by Arun Jaitley and Sushma Swaraj met Mukherjee and said the party welcomed rewriting of the 50-year old Income Tax Act,but said some of the DTC proposals such as an exempt-exempt-tax regime for savings products would hit senior citizens hard. At present,such products are exempt from tax at the investment,accumulation as well as withdrawal stage.

The partys concern about DTC arises from the fear that the middle class,traders and the urban populace,which form its core vote bank,would be affected by its provisions. All contributions to the social security schemes including that of Provident Fund,LIC shall also become taxable (if EET regime kicks in), Swaraj said.

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The BJP called for raising the minimum exemption limit for purposes of taxation to Rs 3 lakh for all,at Rs 3.5 lakh for women and Rs 4 lakh for senior citizens. It also sought the continuation of the present provision regarding tax benefit for housing loans and interest paid on such loans. It said women and senior citizens should have special incentives such as tax-free interest income upto Rs 25,000 a year.

The party,which had earlier described the DTC as optical illusion,said the idea to tax charitable and religious trusts and ignore their constructive activities was unhealthy and demanded that the limit on accumulation should be raised to 50 per cent from15 per cent now.

India Inc found a supporter in the BJP over its stiff opposition of the DTC draft proposal to levy a 2 per cent minimum alternative tax on assets. This will be a deadly blow on the infrastructure sector. The present system of MAT on the profit earning should be continued, the BJP said.

The party also said that NRIs must be treated at par with other Indians. Taxing the interest and investment income at flat rate 20 per cent to 35 per cent is objectionable, it said. It claimed that the code proposed arbitrary powers to the tax administration. In the name of privatisation and liberalisation,the government has proposed inspector raj. All provisions extending such arbitrary power regarding opening assessment,etc,should be dropped, it said.