NEW DELHI: In a bid to protect the interests of donors, the Union Cabinet on Thursday approved the Taxation Laws (Amendment) Bill. It also gave its nod to changes in the Government Securities Bill, 2004 and the Forward Contracts (Regulations) Act of 1952.

Briefing newspersons after the Cabinet meeting, Finance Minister P. Chidambaram said the changes brought about in the taxation laws were based on the recommendations of the Standing Committee on Finance and the Bill would be taken up during the budget session of Parliament. The Bill seeks to ensure that deductions will not be denied to the donor on the ground that following the donation, the approval granted to the donee entity was withdrawn.

Accordingly, to protect the donors' interests in such cases of withdrawal of approval to donee entities, programmes, projects or schemes, the Cabinet cleared the amendment of Clause 5 along with insertion of Clauses 5A, 5B and 8A in the Taxation Laws Bill, 2005 to amend Sec. 35, 35AC, 35CCA and Sec. 80GGA of the Income-tax Act, 1961. The Cabinet also agreed to drop Clause 37 of the Bill and bring it as a separate Central Sales Tax (Amendment) Bill, 2005.

As for government securities, the Cabinet approved changes in the Bill of 2004. On approval by Parliament, it will replace the Public Debt Act, 1944 as also repeal the Indian Securities Act, 1920.

Apart from greater scope in the creation of a liquid government securities market, it will bring about substantial improvement in the transaction of securities.

The proposed amendment to the Forward Contracts (Regulations) Act, Mr Chidambaram said, was to strengthen the Forward Markets Commission (FMC) and effectively regulate and develop the commodity futures markets. Till the time the legislation was enacted, the Cabinet had agreed to certain interim measures, which were to be effected through resolution/order. The changes in the Act, he said, were being made on the recommendations of the Prime Minister's Economic Advisory Council.

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