direct rax code

8/8/2019 Direct Rax Code

1/14

INCOME TAX RATES(%)Income

Slab (Rs.)

Individual Women Senior citizen

Current Proposed Current Proposed Current Proposed

1,60,000 Nil Nil Nil Nil Nil Nil

1,90,000 10 Nil Nil Nil Nil Nil

2,00,000 10 Nil 10 Nil Nil Nil

2,40,000 10 10 10 10 Nil Nil

2,50,000 10 10 10 10 10 Nil

5,00,000 10 10 10 10 10 10

8,00,000 20 20 20 20 20 2010,00,000 30 20 30 20 30 20

12,00,000 30 30 30 30 30 30

Changes in Income Tax Rates


2/14

Proposed DTC increase the limit of income exempt from tax:-

CURRENT PROPOSED PROFIT TO

COMMON PEOPLE

2.00.0

This approval aims to abolis

hthe distinction between t

he individual & women

tax payer, as far of payments of taxes are concerned.

Rising cost of living with each day, an additional disposable income of

4000/- & 1000/- does not sound much appealing.


3/14

CURRENT

INCOME SLAB

PROPOSED

INCOME SLAB

CURRENT

RATE

PROPOSED

RATE

1,60,000 5,00,000 2,00,000-5,00,000 10% 10%

5,00,000-8,00,000 5,00,000 - 10,00,000 30% 20%

8,00,000-more than 10,00,000 more than 30% 30%

There is marginal relief for those who have income between 2,00,000-

10,00,000

The maximum amount that a tax payer can save in maximum income

slab is Rs.24000/- per annum


4/14

Loss to government:

The total loss of government will around Rs. 53,172 crores in tax revenue onaccount of the increase in exemption limits and tweaking of slabs in the Direct

Taxes Code Bill, which will come into effect from April 1, 2012

Benefit to tax payer:

The changes, when they take effect, will help save up to Rs. 41,040 for people

earning more than Rs. 10 lakh a year.


5/14


6/14

The bill tabled in Parliament proposes to replace current BENEFITS from SEZs

Profit-linked to investment-linked:

Special economic zone (SEZ) developers and units availing tax incentives were to be

granted profit-linked tax incentives and new units and developers were to be entitled to

investment-linked tax incentives as per the RDP.

MAT (Minimum alternate tax):-

Increase MAT from 18 per cent to 20 per cent of the book profit of a company. It also

seeks to levy dividend distribution tax at 15 per cent.

The code is governments attempt to streamline and rationalize the direct tax structureand widen the tax-base by lowering tax rates but minimizing exemptions and linking

them to investments to encourage production activity.


7/14

Corporate tax rates: The corporate tax rate in the original DTC was 25% that would

have been looked at extremely positively. In the revised code, it is 30%, still animprovement on the 33.22% prevailing currently

Capital gain: The retention of the zero tax rate on long-term equity gains

Sh

ort-term gains are currently taxed at 17% on listed equity sh

ares; such

gains will nowbe charged at 50% of the base rate, i.e., 5%, 10% or 15%, depending on the applicable

slab rate for individuals, 15% for corporate.

FIIs: Buying or selling securities by FIIs is to be charged capital gainsFIIs will not to be subjected to tax deducted at source and will have to pay advance tax


8/14

Changes in proposed DTC:

Currently available interest deduction of `1.50 lakh on home loan on self-occupied

property has been retained,

Sec 80C, the bill proposes a two-tiered deduction:-

The first tier is a `1 lakh deduction for savings in respect of contributions to theemployee provident fund, PPF, pension fund etc.

The second tier is a deduction with a ceiling of Rs.50,000 reserved for deduction in

respect of life insurance and health insurance premium as well as for tuition fees.

New ULIPs post DTC will not have EEE(exempt-exempt-exempt ) benefit. However,

existing ULIPs will continue to get EEE benefit


9/14

The premium paid by an individual for a life insurance policy for self, spouse or

children will be eligible for this deduction .

premium does not exceed 5% of the capital sum assured in any year during the

term of the policy would be eligible for this deduction.

Securities Transaction Tax (STT) and Education cess are out .

Life Insurance payments and mutual fund income are liable for 10%TDS (source

HRA no longer available.


10/14

NRI:-

Individual shall be resident in India in any financial year ifhe is in the country

for more than 59 days in that year and has been in India for more 365 days in thefour preceding financial years.

A phrase being outside India in the existing income tax law exempted

individuals who stay outside the country for six months from paying taxes

Current personal exemption limit of Rs 1.60 lakh and the deduction of Rs 1 lakh

u/s 80C now exempted from the proposed DTC.

Moreover, all capital gains earned by a non-resident will attract a flat tax of 30per cent, irrespective of the amount of capital gains.

While a resident Indian will be required to pay tax of Rs 3.84 lakh on his taxable

income of Rs 25 lakh, an NRI earning equivalent capital gains will be called upon

to pay almost double tax of Rs 7.5 lakh

,


11/14

Interest on housing loan :-

An individual can claim deduction on interest paid up to `1.5 lakh on a loan taken for

acquisition, construction, repair or renovation of a house property in the financial year in

which such property is acquired or constructed.

This deduction would be allowed only if t

heh

ouse property is owned by the person

and is not let-out in the financial year.

Further, the acquisition or construction of the house property should be completed

within three years from the end of financial year in which the loan was taken.


12/14

Encourage company to convert in LLP(Limited Liability Partnerships)

The provision for conversion of a company into LLP(Limited Liability Partnerships ) hasbeen introduced in the DTC.

The conditions are predominantly the same as introduced by the Finance Act, 2010 in

respect to conversion of private companies/unlisted companies into LLP.

However, th

is exemption continues to be available only to companies with

a sale turnoverof Rs 60 lakh, which may not be very beneficial for large corporate.

The base date for determining the cost of acquisition is to be shifted from April 1, 1981 to

April 1, 2000.

Consequently, all unrealized capital gains on assets for t

he period between April 1, 1981and March 31, 2000 will not to be liable to tax.


13/14

Anti avoidence rule:-

The Direct Taxes Code Bill has proposed General Anti-Avoidance Rules (GAAR) tocheck arrangements with obtaining tax benefits as the main objective .

If the tax authorities find that there has been a misuse or abuse of the provisions of DTC,

or a transaction lacks commercial substance, the officials can use GAAR.

FDIs:-

The government proposed to allow foreign firms to bring in new technology and set up

new independent business without clearance from their existing local joint venture

partners.

A foreign player with a joint venture, set up before January 12, 2005, now faces several

barriers if it wants to set up a new business without approval of the domestic partner.

The relaxations will not be applicable to the joint ventures entered after January 12, 2005.


14/14

Thank you.

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