Direct Tax Code (DTC) to come into force from April,2012 – Finance Minister

Finance Minister Pranab Mukherjee on Wednesday expressed the hope that the Direct Taxes Code ( DTC), which seeks to modernize tax laws in the country, will come into force from April 1, 2012.



Shri Mukherjee said that this conference addresses on important theme namely, “Tax and Inequality” which is a central concern for effective governance and just functioning of a modern welfare nation-state. He stated that the intricate relationship between growth and inequality poses challenges for the formulation of tax policy in both developed, as well as developing countries. Shri Mukherjee said that on the one hand, progressive tax policy is a means to address growing inequalities in incomes and wealth and on the other hand, it provides resources to address the structural issues in inequality and poverty. He said that it facilitates the implementation of public programmes and expenditure policies for capacity building of the less fortunate individuals and communities within countries. At the same time, tax policy has implications for incentivizing economic activity, savings, production or consumption, and hence growth. It is thus a vital instrument of public policy and has to be carefully used, the Minister said.





The Finance Minister said that the policy makers need to make difficult choices about how tax systems can best support growth and help in creating fair and equitable societies. He said that principles of horizontal and vertical equity are important if a tax system is to be seen as fair. Shri Mukherjee said that tax administration, which includes mechanisms to register taxpayers, collect revenue, enforce compliance and provide redress when required, also has a direct bearing on fairness of tax policy. The Minister said that a good tax policy if not administered properly may result in a distribution of the tax burden very different from that which would occur if the tax code was administered effectively.







Shri Pranab Mukherjee said that there is much that we can learn from each other’s tax systems, working experience and the best practices and there is also a need to collaborate and align and make our tax systems speak to each other as we get integrated and the cross-border economic transactions multiply. He stated that the deliberations in the conference would contribute to that process. Informed policy making leads to better tax policy and tax administration and better tax policy and effective tax administration leads to better lives for our citizens, he said.







The Finance Minister said that the issue of the tax reforms was at the heart of the process of economic reforms and liberalization that India embarked on in the early 1990s and we had come a long way since then. He said that the tax reforms though gradual have been systemic in scope, particularly when we consider the proposals currently awaiting implementation. The reforms have covered both the direct taxes as well as the indirect taxes. Shri Mukherjee said that the proposed Direct Taxes Code brings together the policy initiatives on the direct taxes and is slated to come into force from the next financial year. Similarly, he stated that we are moving towards an economy-wide generalized value added tax system of goods and service taxes at all levels in the country. The Finance Minister said that the tax reforms have been directed at:







· Simplification of tax system and its administration;



· Rationalization of tax rates;



· Broadening of tax base;



· Special focus on sunrise area of taxation like transfer pricing and international taxation;



· Strengthening tax information exchange network with countries/ jurisdiction;



· Improvement of tax administration;



· Better tax payer services and reduction in cost of compliance;



· Robust dispute resolution mechanism; and



· Focused enforcement on high net worth individual tax abuse practices and high revenue risk.





Shri Mukherjee said that an efficient tax system is a fundamental requirement for sustained development of any nation. Taxes underwrite the capacity of a nation to implement its development and welfare goals, he said. The Finance Minister said that it is a means to promote equity in the distribution of gains from economic growth in a country like India. He stated that we have adopted a progressive personal income tax to address the inequality and our progressive direct tax policy has resulted in a ten-fold increase in direct tax revenue from USD 8.62 billion in the fiscal year 1996-97 to US 87 billion in fiscal year 2010-11. The Finance Minister said that more importantly, the composition of our tax revenues has altered significantly in favour of direct taxes which now account nearly 60 per cent of our total tax revenues. We have tried to address the issue of gender inequality and old age vulnerabilities by providing some tax relief to women and old people, he said.





Shri Mukherjee said that tax evasion undermines the intended benefits of a progressive tax policy. He said that the problem is compounded by illicit outflow of money from emerging economies and developing countries. Global financial integrity has estimated such annual illicit outflows averaging between USD 725 to 810 billion from these countries. The Finance Minister said that the Indian Government has adopted a five pronged strategy to deal with issues of tax evasion and black money which includes:



· Joining the global crusade against black money;



· Creating an appropriate legislation framework;



· Setting up institution for dealing with illicit money;



· Developing systems for implementations; and



· Imparting skill to the manpower for effective action.







In his concluding remarks, Shri Mukherjee said that the strategy has started showing result. However, resolution of these issues requires international co- operation and alignment of tax systems for better cross-border compliance, he added. The Finance Minister said that the complexity of cross border transactions is on a rise and presents a serious challenge to tax administrators in practicing and bringing equality. The opacity of tax systems in some of the jurisdiction is adding to the challenges. There has been some movement on these issues in response to the initiative by G-20 but we need to pursue this to its logical end, he said.







Speaking on the occasion, China’s Vice Minister of Finance, Mr. Wang Jun said that at the crucial moment of world economic and social development, it is of great importance and significance for people from the world financial and tax communities to gather together, share their experience and wisdom to make their contributions to a more balanced global economy, more equitable international community and more harmonious human society.



Deputy Managing Director, IMF, Mr. Min Zhu said that the IMF had been focused on the issues of inequality and poverty for many years, across the range of their activities. He said that in its surveillance and program work, IMF has long highlighted, to give just one example, that the benefits of the huge fuel subsidies in many countries go overwhelmingly to the richest, and that there are better ways to help the poor.



Also present on the occasion were Minister of State for finance (Revenue), Shri S.S. Palanimanickam and Minister of State for Finance (Expenditure, Banking and Insurance), Shri Namo Narain Meena

The importance of Home insurance

Home insurance is as important as Life Insurance … why?


Your home is perhaps your single largest investment in your life and your housing loan may be secured against it. If your home is uninsured and some damage was happened to it due to fire or other natural calamity, then not only have you lost your home and largest investment, but you are still faced with paying back the loan amount in full. We may not be able to afford a second home or even have the resources to rebuild our existing home in case of any loss. That’s where home insurance can be a very useful instrument to safeguard our belongings. Our home, its content and other risks associated with it can be made completely secure with a good home insurance policy. Clearly, not many people are faced with seeing their home burn down but damage and loss to your home can occur in many ways. Storms, gas explosion, vehicle accident and flood may spring to mind. But don’t forget that a thief will probably damage your house whilst gaining entry or might cause damage to your doors or decorations whilst searching your home. They may even try to steal all valuable items like jewellery, cash, electronic items etc. For many that would mean financial disaster. Home Insurance avoids such risks.



Of course since the home is a very costly affair forming almost 75% of our entire life time savings, it is indeed necessary that such a valuable asset as your own home be kept safe from all harm. Every homeowner knows how important it is to have a home insurance policy. Losing one's home or property to fires, floods, earthquakes and other natural and man-made disasters can be devastating. Since no homeowner can pinpoint exactly when something tragic or unavoidable will happen to his or her home and property, it is all the more reason to be prepared. A home insurance policy gives a homeowner some protection and sense of psychological relief. A good home insurance policy in place will protect you from disaster and other unfortunate events that may befall your home and property. Not only does home insurance protect you financially, it also protects you psychologically since having a good home insurance policy gives you peace of mind and sense of security.

The only way to ensure this to take out an insurance policy on your home whereby should disaster strike, the insurance policy gets into action to recreate your home or pay for the damages, whatever is stipulated in the contract or insurance policy between the insurance company and the homeowner. With an insurance policy in your pocket, all is safe. Yes, to a major extent it will be, but now you need to know that it is important to choose a good insurance company who can back you regarding your house in times of trouble. A good insurance company that take a reasonable premium and delivers great service and is accessible round-the-clock to take care of your queries before and after purchase of the insurance policy.

Home insurance covers the homeowner in case of total loss of home or property caused by a disaster. In short, home insurance protects a homeowner from damages caused by "acts of God." Check your home insurance policy and see if it covers your home under the "all risks" clause. In simple terms, the "all risks" clause means that as long as the policy is intact, it will cover your home and property in the policy in any circumstance, with the exception of those circumstances that are in the exclusion clause. To illustrate, under the "all risks" clause, your home is covered for damages caused by fires, earthquakes, theft, flood etc. If the policy doesn't include riot damage in its "all risks" clause, it means that your home insurance will not cover damages to your home caused by riot. The provisions for home insurance vary from insurance company to company.

Taking out an insurance policy on your possessions is always recommended. In the event of natural disasters, accidents, thefts and the like where you are not responsible for the damage or theft of your valuables, it is the insurance policy that can come to your rescue. That means you insure you goods to the value that you purchased them and pay a premium every year to the insurance company for a specified period and the insurance is there to take care of our goods, should the unexpected happen. To save and set by for the future in today's world is not all that easy because of the competition for jobs, the lack of employment, the rise in prices that double to our wages, etc. Hence it is indeed necessary that if we are to purchase something of great value like a vehicle or a home or precious jewelry, we look into insuring them for the future. In this way our money is seldom lost, even when damage or the unexpected strikes and leaves us seemingly empty of our valuables.

Householders or homeowners insurance, commonly known as home insurance, is the type of property insurance that covers private homes and various contents in it against a variety of risks. This insurance policy combines various insurance protections such as losses arising due to damage to one’s home and/ or its contents, loss of personal belongings or possessions of the homeowner and liability arising out of accidents that may happen at home. The policy document clearly lists down what will and what will not be paid in case of any unforeseen event. Broadly, the home insurance policy covers the building structure and contents, loss due to burglary/ theft, loss of jewellery or valuables, baggage loss, damage or loss of domestic and electrical appliances, damage to electronic equipments and other belongings like Pedal cycles, etc. You can also insure the contents of your home against loss due to burglary and /or housebreaking or any attempted burglary. Jewellery kept in Locked Safe within the Home premises can also be covered

The cost of home insurance usually depends on the cost one would incur to replace the house or its contents as covered under the policy and additional insured riders.

The policy is usually divided into various sections

· Fire and Allied Perils like lightning, Acts of God, riot and strike, etc

· Burglary and housebreaking including larceny and theft

· All risks

· Plate Glass

· Breakdown of domestic appliances or any accidental loss to them

· T.V. Sets, VCR, Audio system, Music Players, DVD players

· Pedal Cycles

· Baggage - either due to accident/ damage or while travelling

· Accident injury which causes death or total/ partial disablement

· Public/ Third Party Liability

If you own the building or house, you may purchase the householders' insurance policy for it. In case your tenants want to insure their belongings, they have to purchase a separate policy for their belongings.