Scribd
Upload
56 views22 pages

Direct Tax Code: Taxation Presentation On

The document provides an overview of the key aspects of India's proposed Direct Tax Code (DTC) which aims to replace the existing Income Tax Act of 1961. Some of the major changes highlighted include removing most tax-exempt benefits, introducing moderate tax slabs of 10%, 20%, 30%, simplifying tax compliance, and expanding the tax base. While the DTC was initially proposed to be implemented from April 2011, it has been deferred multiple times. The DTC aims to establish a new transparent tax regime with greater taxpayer compliance.

Uploaded by

Vrinda Khanna
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
56 views22 pages

Direct Tax Code: Taxation Presentation On

The document provides an overview of the key aspects of India's proposed Direct Tax Code (DTC) which aims to replace the existing Income Tax Act of 1961. Some of the major changes highlighted include removing most tax-exempt benefits, introducing moderate tax slabs of 10%, 20%, 30%, simplifying tax compliance, and expanding the tax base. While the DTC was initially proposed to be implemented from April 2011, it has been deferred multiple times. The DTC aims to establish a new transparent tax regime with greater taxpayer compliance.

Uploaded by

Vrinda Khanna
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 22

Taxation Presentation on:

Direct Tax Code


By: Vrinda Khanna - 7161 Saloni Chaudhary - 0073 Ayan Nagpal - 7164 Pooja Jha - 0044

Introduction
S The New Direct Tax Code (DTC) is said to replace the existing

Income Tax Act of 1961 in India. DTC bill was tabled in parliament on 3oth August, 2010. There are big changes now in monsoon session and There are now much less benefits as compared to what were in the original proposal.
S During the Budget 2012 presentation, the finance minister Mr.

Pranab Mukherjee reiterated his commitment to bringing into fore the new direct tax code (DTC) into force from 1st of April, 2011, but same could not be fulfilled.
S Again, as per budget presented on 16th March, 2012,

Implementation of Direct tax code has again been deferred and wont be applicable from 1st April, 2012.

S The proposed Direct Tax Code is a combination of

major tax relief and removal of most tax-exempted benefits.

It is expected to usher in a new tax regime of transparency and greater compliance.

Advantages
The Direct Tax Code will :
S eliminate distortions in the tax structure, S introduce moderate levels of taxation, S expand the tax base, S improve tax compliance, S simplify the language and lower tax litigations.

Highlights of the Direct Tax Code


S

Removal of most of the tax saving schemes


S DTC removes most of the categories of exempted

income.

S Unit Linked Insurance Plans (ULIPs), Equity Mutual

Funds(ELSS), Term deposits, NSC (National Savings certificates), Long term infrastructures bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property will loose tax benefits.

New tax saving schemes

S Tax saving based investment limit remains 100,000 but

another 50,000 has been added just for pure life insurance (Sum insured is atleast 20 times the premium paid) , health insurance, medi-claims policies and tuition fees of children.

S But the one lakh investment can now only be done in

provident fund, superannuation fund, gratuity fund and new pension scheme (NPS).

Tax Slabs

S The Income tax rates and slabs have been modified. The

proposed rates and slabs are as follows:


Annual Income Tax Slab

Up-to INR 200,000 (for senior citizens 250,000)


Between INR 200,000 to 500,000 Between INR 500,000 to 1,000,000Above INR 1,000,000 Above INR 1,000,000

Nil
10% 20%

30%

Home Loan Interest

S Exemption will remain same as 1.5 lakhs per year

for interest on housing loan for self-occupied property.

Short and long term gains

S Only half of Short-term capital gains will be taxed. e.g. if

you gains 50,000, add 25,000 to your taxable income.

S Long Term Capital Gains (From equities and equity

mutual funds, on which STT has been paid) are still exempted from income tax.

EEE and EET

S As per changes on 15th June, 2010, Tax exemption at all

three stages (EEE) savings, accretions and withdrawalsto be allowed for provident funds (GPF, EPF and PPF), NPS (new pension scheme administered by PFRDA), Retirement benefits (gratuity, leave encashment, etc), pure life insurance products & annuity schemes.
S Earlier DTC also wanted to tax withdrawals.

Education Cess and Education Loan


S Surcharge and education cess are abolished.

S Tax exemption on Education loan to continue.

Income arising from House Property


S Deductions for Rent and Maintenance would be reduced

from 30% to 20% of the Gross Rent. Also all interest paid on house loan for a rented house is deductible from rent.
S Before DTC, if you own more than one property, there

was provision for taxing notional rent even if the second house was not put to rent. But, under the Direct Tax Code 2010 , such a concept has been abolished.

Corporate tax

S Corporate tax reduced from 34% to 30% including

education cess and surcharge.

Taxation of Capital Gains from Property Sale


S For sale within one year, gain is to be added to taxable

salary.
S For long term gain (after one year of purchase), instead

of flat rate of 20% of gain after indexation benefit, new concept has been introduced. Now gain after indexation will be added to taxable income and taxed at per the tax slab.
S Base date for cost of acquisition has been changed to 1st

April, 2000 instead of earlier 1st April, 1981

Medical reimbursement

S Max limit for medical reimbursements has been

increased to 50,000 per year from current 15,000 limit.

Tax on dividends

S Equity mutual fund will attract 5% dividend distribution tax

(DDT). DDT has been removed from debt and non-equity based mutual funds but now dividends on non-equity funds will be taxable in investors hand as per his slab rates.
S There will also be a TDS 0f 10% (20% in case of NRI and

companies) if dividend is more than 10,000 Rs for nonequity funds.

News for NRIs

S As per the current laws, a NRI is liable to pay tax on

global income if he is in India for a period more than 182 days in a financial year. But in new bill, this duration has been changed to just 60 days.
S An NRI will be deemed as resident only if he has also

resided in India for 365 days or more in the preceding four financial years, together with 60 days in any of these fiscal years.

S Even if an NRI becomes a resident in any financial year,

his global income does not immediately become liable to tax in India. Global income would become taxable only if the person also stayed in India for nine out of 10 precedent years, or 730 days in the preceding seven years.
S This is very unfair to Seafarers. To avoid any income tax,

an Indian sailor employed with a foreign ship will have to stay maximum for 60 days in India.

Conclusion
S If the Tax Code is generous in giving relief to tax payers,

be sure, it will also make life miserable for those who evade tax through fraudulent means. As the Tax Code prescribes stiff penalties and prosecution for noncompliance with the tax laws, it proposes that every tax offense under the Code will be punishable by both imprisonment and fine.
S Apart from defaulters, the Tax Code proposes to punish

tax consultants who help in tax evasion. It gives sweeping powers and blanket protection to Income Tax officials for initiating court proceedings on matters relating to tax offences.

Thank you

You might also like