Session 6: Direct Taxes Code

This week's session will focus on the proposed Direct Taxes Code. The discussion paper circulated with the code is the reading for the week. It can be accessed here.

The issues for discussion are as follows:

Introducing the Direct Tax Code (“DTC”)
1. What are the basic objectives of the DTC?
2. What are the salient features of the DTC?
3. How s the DTC going to effect non-profit organisations?

Presumptions and implication of the DTC on savings
1. What is the treatment of savings under the new DTC?
2. What are the implications on the tax-GDP ratio?
3. What are the implications of presumptions towards tax-evasion as envisaged under S. 114 of the DTC?

General Anti-Avoidance Rules
1. What are the judicial principles and tests laid down prior to the DTC in terms of tax avoidance?
2. Has the DTC blurred the distinction between tax-evasion and tax-avoidance?
3. What are the different tests to trace anti-avoidance and what are their consequences?
4. Are the powers of the Commissioner of Income Tax well defined?

Treaty Obligations and Business Transactions
1. How does the DTC affect treaty shopping in light of UOI v. Azadi Bachao Andolan & Anr.?
2. Will the DTC hamper foreign institutional investments (FII)?3. What is the effect on DTC on foreign vis-à-vis Indian corporations? How does this equate to the purpose of broadening the tax base?

Recommended Readings:

1. UOI v. Azadi Bachao Andolan & Anr, MANU/SC/1219/2003.
2. McDowell & Company v. C.T.O, MANU/SC/0154/1985.

3. The Direct Tax Code Bill, 2009