With regard to direct taxes, the Finance Bill 1999 omits the provison to Section 72 so that it is no longer necessary that the business in which the loss originally computed continues to be carried on in subsequent years. These losses have been taken care of, but the industry pointed out, there was a crucial omission with respect to unabsorbed depreciation.

Similarly, there is a similar requirement in the proviso to Section 32(2) which necessitates that the business for which the allowance was originally computed should be continued to be carried on by the assessee in the subsequent year in order to avail of the benefit of carry forward of unabsorbed depreciation. This proviso appears to have been missed by the draftsman presumably because of the rush of work relating to finalisation of the bill.

In case of provisions relating to corporate restructuring, the Finance bill has not defined the actual cost of asset in the hand of the transferee company. Also the date on which net worth of the undertaking being the cost of acquisition and cost of improvement is to be arrived at in relation to the transfer of the undertaking in a slump sale has not been specified.The Government has also not been able to clarify the tax effect of transfer of undertaking at fair market value as per a scheme of arrangement approved by a High Court for the demerged company and shareholders of the demerged company. In addition, the meaning of "going concern basis" needed further clarification.

It was pointed out that Section 50 stipulates that in the case of depreciable assets, money received on transfer of asset shall be reduced from the block of assets for grant of depreciation. However, what is unclear is that how the insurance claim received on destruction/damage of a capital asset would become money received on transfer of a capital asset unless necessary changes are incorporated in the section 50 of the Act.

In absence of clarifications, it is feared that investors in the schemes of Unit Trust of India (UTI) and other mutual funds will not benefit from the reduction in rate of long term capital gains tax to 10 per cent as the entire mutual fund industry has been excluded from tax reduction.

The budget has proposed to limit the tax on long-term capital gains at 10 per cent of the capital on securities as defined in section 2(h) of the Securities Contracts Regulation Act (SCRA) 1956 and listed on recognised stock exchanges. However, since neither the word, "Mutual funds","units" or Unit Trust of India appear in the relevant section of SCRA, mutual funds investors will be unable to take advantage of the tax concessions.