units are not adversely impacted during the transition period however sez units which are set up after the dtc comes into force may not be eligible for any incometax incentives the government has also sought to introduce certain safeguards against a blatant application of gaar contained in the draft dtc gaar has been resisted on account of its sweeping nature the plenary powers vested with the taxman to invoke the same as well as the intention to override indias tax treaties it has now been clarified that gaar will not be invoked for every tax mitigation arrangement and that the central board of direct taxes has been tasked with the responsibility to provide guidelines for additional safeguards and threshold limits for triggering gaar further taxpayers would have recourse to a dispute resolution panel drp forum however the rdp does not indicate the government would relook at the substantive aspects of the gaar provision including the expansive definition of an impermissible avoidance arrangement and the shifting burden of proof on the tax authoritycertain other draft dtc provisions on which concerns were expressed such as taxation of indirect transfers expansion of source rule for interest withholding tax provisions computation of business profits bpt etc are not addressed in the rdp one would need to await the revised dtc to understand how the government seeks to address the concerns raised on these provisions of the dtc the draft dtc had also proposed a reduction in corporate tax rate to 25 however the rdp hints that the government may need to consider a more calibrated approach to reduction in the tax rates in light of the proposals contained in the rdp it is expected that the government would table the revised dtc in the next session of parliament later this year after taking into consideration public comments on the rdp which are to be made by 30 june 2010 it is the intention of the government to implement the dtc with effect from 1 april 2011 the release of the rdp indicates the direct tax reform process initiated by the government last year by releasing the dtc is in progress the business community would need to assess the impact these proposals could have on their current structures and business models and also engage proactively with the government to present their points of view the author is a senior tax professional with ernst young views expressed are personal