After that the ministry would finalise its report and then consider if there was a necessity to amend the Income Tax Act. He said, if an amendment is required then it will be put before the Cabinet which may take longer time.
The guidelines will be based on the suggestions of the committee headed by tax expert Parthasarthi Shome who submitted the final report to the Minister earlier in the day.
The Shome Committee had in its draft report recommended postponement of the controversial tax provision by three years to April 1, 2016, and abolition of capital gains tax on transfer of securities. It had suggested that GAAR provisions should not be invoked to examine the genuineness of the residency of entities in Mauritius.
Chidambaram said the other report by the Shome Committee on indirect transfer of assets by non-resident Indians would be put up on the ministry’s website for comments.
Mr. Chidambaram said, the Revenue Department will also look into the proposal of exempting annuity policy from service tax in line with National Pension Scheme (NPS). With regard to social security insurance schemes, he said the tax authorities would examine whether first year premium and subsequent premiums on such schemes like Janshri Bina Yojana and Aam Adami Bima Yojana could be exempted from service tax. He said, these are intended to benefit the weaker and vulnerable sections of the society. He added that a similar exemption is to be examined in the case of micro insurance policies. The CBEC will be requested to examine whether service tax may be assessed to realisation basis.
Chidambaram also said that the Department of Revenue will examine whether, in addition to NPS, some insurance pension products as approved by IRDA may be included in the separate limit over and above the limit of 1 lakh rupees under section 80C of the Income Tax Act for the purpose of income tax deduction on the premium.
Further, whether contribution made to post retirement medical scheme offered by insurance companies may be allowed as deduction will also be examined. He added, it is proposed to schedule, shortly, a similar meeting with the General Insurance sector to sort out issues in the non-life insurance sector. Chairman, IRDA will be invited to attend the meeting.
