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A
COMPREHENSIVE PROJECT
ON
COMPARATIVE ANALYSIS
OFDIRECT TAX CODE AND INCOME TAX ACT
Submitted to
C K SHAH VIJAPURWALA INSTITUTE OF MANAGEMENT
IN PARTIAL FULFILLMENT OF THEREQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATIONUnder
Gujarat Technological University
UNDER THE GUIDENCE OF
Faculty GuideMs. Ishita Ashara(Asst. Professor)
Submitted by
Sushank Kadam Chirag RupaniEnrolment No. Enrolment No.
(097050592040) (097050592012)
M.B.A. SEMESTER IV
C K Shah Vijapurwala Institute of ManagementM.B.A. PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
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April 2011
S u b m i t t e d b y :
S u s h a n k K a d a m
E n r o l m e n t
N o : 0 9 7 0 5 0 5 9 2 0 4 0
C h i r a g R u p a n i
E n r o l m e n t
N o : 0 9 7 0 5 0 5 9 2 0 1 2
Submitted to:
C.K.Shah Vijapurwala Institute of
Management
In partial fulfilment of the requirement of
the award for MBA under Gujarat
Technological University
Comparative Analysis
of
Direct Tax Code
&
Income Tax Act
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PREFACE
MBA is a stepping-stone to the management carrier and to
develop good manager it is necessary that the theoretical must be
supplemented with exposure to the real environment. Theoretical
knowledge just provides the base and its not sufficient to produce a
good manager thats why practical knowledge is needed.
Therefore the research product is an essential requirement for
the student of MBA. This research project not only helps the student to
utilize his skills properly learn field realities but also provides a chance
to the organization to find out talent among the budding managers in
the very beginning.
As a student of professional course, it is quite necessary for us
to have knowledge about the practical aspect of Taxation within India
and the Direct tax code which will be levied from 2012. The project
work is to develop our ability and knowledge about the new tax code
i.e. Direct Tax Code & develop ideas in that context.
The theoretical knowledge & conceptual ideas are the
background for the career development but project work has also equal
contribution for occur. The sentence experience is the best teacher is
very true in every field & so project work during the course is arranged
to develop the skill & attitude.
It is rightly said that practice makes a man perfect. In order to
achieve excellence and success, theoretical knowledge must be
supplemented with practical knowledge and practical work i.e. is
Project work. Among the numerous interesting things concerned with
changing the understanding of management students, this project work
plays an important role in development of us.
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ACKNOWLEDGEMENT
Completion of project has been possible only because of the
constant encouragement, goodwill, support and guidance of our peers.
The cooperation by them acted as a driving force at each stage during
the project.
We express our gratitude to MS. Ishita Ashara our project guide
for directing our project in right direction and for creating opportunistic
situation to gain knowledge. Also we thank her for helping us to guide
in making our project memorable. We are also very thankful to all
faculties for providing useful information about Project preparation,
various aspects regarding project.
We also thank to Dr. Rajesh Khajuria (Director) for giving us a
great opportunity to learn Direct Tax Code. We also thank them for
tremendous support they have provided by taking time out of their busy
schedules.
We also give a special thanks to all staff of C.K.Shah
Vijapurwala Institute of Management for keeping us on our toes
throughout the program and also helping us through their work
schedule.
We thank all our colleagues & friends for providing a goodworking atmosphere in the organization.
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DECLARATION
We, Sushank Shantaram Kadam and Chiragkumar
Bipinchandra Rupani, hereby declare that the report for
Comprehensive Project entitled Comparative Analysis of
Direct Tax Code & Income Tax Act is a result of our own work
and our indebtedness to other work publications, references, if
any, have been duly acknowledged.
DATE: 28/04/2011
PLACE: Vadodara
Sushank S. Kadam
...............................
Chirag B. Rupani
................................
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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
Direct tax code, it is said to replace the existing Income Tax Act,
1961. The Government had announced its intention to introduce a
revised and simplified Income tax Bill. If approved, the DTC shall come
into force from April 1, 2012, and shall be applicable for the financial
year 2012-13. The new tax code would be a vast improvement over
Income Tax Act 1961. To moderate tax rate and simplify tax laws, all
direct taxes including FBT and income tax would be brought under one
code. The new code is aimed at eliminating the scope of litigation as far
as possible.
Direct Tax code (DTC) 2012 proposes substantial changes to
the current direct tax legislation and is likely to have significant impact
on the business community. The business community do well to assess
the impact on their current structure and business models. Direct Tax
Code seeks to increase tax exemption on income from Rs. 1.8 lakh
to Rs. 2 lakh and fix the corporate tax at a flat 30 per cent. As per the
Bill, income from Rs. 2-5 lakh will be taxed at 10 per cent; Rs. 5-10 lakhat 20 per cent and 30 per cent thereafter.
The Direct Tax Code significantly highlighted on following points.
Income tax exemption limit proposed at Rs. 2 lakh per annum, up from
Rs. 1.8 lakh.
10 per cent tax on annual income between Rs. 2-5 lakh, 20 per cent on
between Rs. 5-10 lakh, and 30 per cent for above Rs. 10 lakh.
Tax burden at highest level will come down by Rs. 41,040 annually.
Corporate tax to remain at 30 per cent but without surcharge and cess.
http://www.fingyan.com/income-tax-act-in-india/http://www.fingyan.com/income-tax-act-in-india/http://www.fingyan.com/income-tax-act-in-india/http://www.fingyan.com/income-tax-act-in-india/ -
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The Minimum Alternate Tax (MAT) rate has been increased from 18 to
20 percent.
Dividend distribution tax, tax on distributed profits of a domestic co will
be 15 percent.
Exemption for investment in approved funds and insurance schemes
proposed at Rs. 1.5 lakh annually, against Rs.1.2 lakh currently.
DTC removes most of the categories of exempted income. Equity
Mutual Funds (ELSS), Term deposits, NSC (National Savings
certificates), Unit Linked Insurance Plans (ULIPs), Long term
infrastructures bonds, house loan principal repayment, stamp duty and
registration fees on purchase of house property will lose tax benefits.
Only half of Short-term capital gains will be taxed.
For incomes arising of House Property: 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.
Tax exemption on Education loan to continue.
Tax exemption on LTA (leave travel allowance) is abolished.
Taxation of Capital gains from property sale: For sale within one year,
gain is to be added to taxable salary.
Tax on dividends: Dividends will attract 5% tax.
Medical reimbursement maximum limit for medical reimbursements has
been increased to 50,000 per year from current 15,000 limits.
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SR NO PARTICULARSPAGE
NOPART I GENERAL INFORMATION
1 INTRODUCTION 13
2 NEED,FEATURES & OTHER ASPECT 32
a) Need for DTC 33
b) Salient Features Of DTC 35
c) Development Of DTC 37
3 TAX SLAB RATE OF DTC 39a) Tax Deductions 41
b) Post DTC Tax Liabilities & Savings 43
4 SCHEDULES TO DTC 44
5 EXPERTS VIEWS ON DTC 46
PART II PRIMARY STUDY
6 RESEARCH METHODOLOGY 52
a) Research Methodology 53b) Objective Of Study 53
7 MECHANISM OF TAXATION 54
8 COMPARATIVE STUDY 59
9 INDUSTRYWISE IMPACT ANALYSIS 65
10 EXAMPLE 80
11 RESULTS & FINDINGS 89
12 PROPOSED CHANGE IN DTC IN 2011 9313 PROS AND CONS 96
14 CONCLUSION 99
15 BIBLIOGRAPHY 102
LIST OF TABLES/GRAPHS/DIAGRAMS
TABLE OF CONTENT
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LIST OF TABLES/GRAPHS/DIAGRAMS
SR NO. PARTICULARS TABLE PAGE
1 FEATURES OF DTC 1 32
2 TAX SALBS OF INDIVIDUALS 2 39
3 TAX SALBS OF SENIOR CITIZEN 3 40
4 COMPARISION OF TAX SLAB 4 41
5 COMPARISION OF TAX LIABILITY 5 42
6 MECHANISM OF TAXATION 6 54
7 COMPARISION OF TAX RATES 7 63
8TAX LIABILITY AT DIFFERENT
INCOMES8 82
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PART I
GENERAL INFORMATION
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INTRODUCTION
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INTRODUCTION
The draft Direct Taxes Code (DTC) along with a
Discussion Paper was released in August, 2009 for public
comments which will going to enacted w.e.f.1st day of April 2012.
Since then, a number of valuable inputs on the proposals outlined
in these documents have been received from a large number of
organisations and individuals. These inputs have been examined
and the major issues on which various stakeholders have given
their views have been identified.
The existing Income Tax Act of India was enacted in 1961. It
replaced the first Income Tax Act of 1922. Thus, historically, the first
Income Tax Act was operational for almost 40 years and the existing
one has been in place for almost 48 years. Little change has been
made during this time up until the current proposals.
Over the years, Indias tax laws have become more complicated
and difficult to administer or even understand. Litigation is at an all
time high in the country with tribunals and courts swamped with tax
disputes being challenged by the taxpayers and the tax department.The present Income Tax Act contains more than 400 sections and
even more subsections, provisos and explanations. For the general
tax payer, it is virtually impossible to decipher the act.
The Indian government is seeking to initiate radical tax reforms
by proposing to enact a new Direct Tax Code which will replace the
existing Income Tax Act and come into effect on April 1, 2012 (for the
fiscal year 201213). The Direct Taxes Code Bill was placed by the
Finance Minister for public debate and discussion on August 12,
2009. The code seeks to combine the law relating to all direct taxes
(income tax and wealth tax) less than one roof. The proposed DTC
has been designed with the objective of simplification of the
provisions of tax laws by having a fresh look at the provisions of the
act. After taking into consideration the representations received on the
proposed provisions of the DTC, the government has now proposed
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to modify the DTC and issued a revised discussion paper to this effect
on June 15. This Revised b i l l addresses these major issues.
The issues which this Revised Discussion Paper addresses are:
i. Minimum Alternate Tax (MAT) - Gross assets vis-a-vis book
profit.
ii. Tax treatment of savings - Exempt Exempt Tax (EET) vis-a-vis
Exempt Exempt Exempt (EEE) basis.
iii. Taxation of i nc om e fr om emp l oy me nt - Ret ir emen t
benefits and perquisites.
iv. Taxation of income from house property.
v. Taxation of capital gains
vi. Taxation of non-profit organisations
vii. Special Economic Zones Taxation of existing units
viii. Concept of Residence in the case of a company incorporated
outside India.
ix. Double Taxation Avoidance Agreement (DTAA) vis-a-vis
domestic law. x. Wealth Tax.
X. General Anti Avoidance Rule (GAAR).
The proposals in this revised bill would lead to a reduction in the
tax base proposed in the DTC. The indicative tax slabs and tax rates
and monetary limits for exemptions and deductions proposed in the DTC
will, therefore, be calibrated accordingly while finalising the legislation.
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MINIMUM ALTERNATE TAX-GROSS ASSET VIS--VIS BOOK
PROFIT
The bill includes discussion on the DTC deals with Minimum
Alternate Tax (MAT). As stated in the /nm
Discussion, a company would ordinarily be liable to tax in respect
of its total income. However, owing to tax incentives, the liability on
total income, in many cases, has been found to be extremely
low or even zero. Internationally, a variety of economic bases
and methods are used to calculate presumptive income so as to
overcome the problem of excessive tax incentives. These
presumptions could be based on net wealth, value of assets used in
business or gross receipts of the enterprise.
It has been proposed in the DTC that the "value of gross
assets" will be the aggregate of the value of gross block of fixed
assets of the company, the value of capital works in progress of
the company, the book value of all other assets of the company,
as on the last day of the relevant financial year, as reduced
by the accumulated depreciation on the value of the gross block of
the fixed assets and the debit balance of the profit and loss
account if included in the book value of other assets. The rate of
MAT will be 0.25 per cent of the value of gross assets in the
case of banking companies and 2 per cent of the value of gross
assets in the case of all other companies. The MAT will be a final
tax.
TAX TREATMENT OF SAVINGS EXEMPT EXEMPT TAX (EET)VIS--VIS EXEMPT EXEMPT EXEMPT (EEE) BASIS
This DTC bill proposes the Exempt-Exempt-Taxation (EET)
method of taxation for savings. Under this method, the
contributions towards certain savings are deductible from income
(this represents the first 'E' under the EET method), the
accumulation/accretions are exempt (free from any tax incidence)
till such time as they remain invested (this represents the second
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E under the EET method) and all withdrawals at any time are
subject to tax at the applicable marginal rate of tax (this represents
the T under the EET method).
Based on the EET principle, the Code provides for deduction
in respect of aggregate contributions up to a limit of (Rs.300000)
three hundred thousand rupees (both by the employee and the
employer) to any account maintained with any permitted savings
intermediary, during the financial year. This account will have to be
maintained with any permitted savings intermediary in accordance
with the scheme framed and prescribed by the Central
Government. The permitted savings intermediaries will be approved
provident funds, approved superannuation funds, life insurer and
New Pension System Trust.
It has been represented that in India, in the absence of a
universal social security system, the proposed EET method of
taxation of permitted savings would be harsh. Tax payers require
some flexibility in making withdrawals in lump sum without being
subjected to tax. People may need lump sum funds on retirement
for various family obligations. Requests have therefore been made
for continuation of Exempt Exempt Exempt (EEE) method of tax
treatment of investments. Alternatively, the application of EET
should be restricted to new savings instruments after the date
from which the DTC comes into effect, and it should not apply to
existing saving instruments.
Therefore, as of now, it is proposed to provide the EEE method
of taxation for Government Provident Fund (GPF), Public
Provident Fund (PPF) and Recognised Provident Funds (RPFs)
and the pension scheme administered by Pension Fund
Regulatory and Development Authority. Approved pure life
insurance products and annuity schemes will also be subject to
EEE method of tax treatment. In order to achieve the objective of
long term savings, the rules for contribution as well as withdrawal
will be harmonised and made uniform so that such savings are
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actually made and utilised by the taxpayer for the long term.
Investments made, before the date of commencement of the
DTC, in instruments which enjoy EEE method of taxation under
the current law, would continue to be eligible for EEE method of
tax treatment for the full duration of the financial instrument.
TAXATION OF INCOME FROM EMPLOYMENT RETIREMENT
BENEFITS AND PERQUISITES
Direct Taxes Code (DTC) deals with computation of income
taxable under the head Income from employment. It provides
that Income from employment will be gross salary as reduced
by the aggregate amount of permissible deductions.
Now the term salary is defined to include the value of
perquisites, profits in lieu of salary, amount received on voluntary
retirement or termination, leave salary, gratuity and any annuity,
pension or any commutation thereof. Contributions made by the
employer to an approved superannuation fund, provident fund, life
insurer and New Pension System Trust is considered as salary.
Deductions from gross salary are allowed for compensation
received under voluntary retirement scheme, amount of gratuity
received on retirement or death and amount received on
commutation of pension to the extent such amounts are
deposited in a Retirement Benefits Account. Thus, retirement
benefits will be exempt only if deposited in Retirement Benefits
Account and will be subject to tax on withdrawal from such account.
Under the DTC, salary will include, inter-alia, the
following:-
(a) The value of rent free or concessional, accommodation
provided by the employer irrespective of whether the
employer is a Government or any other person;
(b) The value of any leaves travel concession;
(c) The amount received on encashment of unveiled earned
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leave on retirement or otherwise;
(d) Medical reimbursement; and
(e) the value of free or concessional medical treatment paid
for, or provided by, the employer.
TAXATION OF INCOME FROM HOUSE PROPERTY
The Direct Taxes Code (DTC) deals with the computation of
income from house property. Income from house property is one
of the five heads under which accruals or receipts relating to
ordinary sources of income are to be classified. The bill states
that income from house property, which is not occupied for the
purpose of any business or profession by its owner, is to be taxed
under this head. The bill proposes a new scheme for computation
of income from house property in the draft DTC, the salient features
of which are:
(a) Income from house property shall be the gross rent less
specified deductions.
(b) Gross rent will be higher of (i) the amount of contractual
rent for the financial year; and (ii) the presumptive rent
calculated at six per cent per annum of the rateable value
fixed by the local authority. However, in a case where no
rateable value has been fixed, six per cent shall be calculated
with reference to the cost of construction or acquisition of
the property. If the property is acquired during the financial
year, the presumptive rent shall be calculated for the
proportionate period of that financial year.
(c) The advance rent will be taxed only in the financial year to
which it relates.
(d) The gross rent of one self-occupied property will be deemed
to be nil, as at present. In addition, the gross rent of any one
palace in the occupation of a ruler will also be deemed to be
nil, as at present.
(e) The following deductions will be admissible against the gross
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rent:-
(i) Amount of taxes levied by a local authority and tax on
services, if actually paid.
(ii) 20% of the gross rent towards repairs and maintenance
as against thirty per cent at present.
(iii) Amount of any interest payable on capital borrowed
for the purposes of acquiring, constructing, repairing,
renewing or re- constructing the property.
(f) In the case of a self-occupied property where the gross
rent is deemed to be nil, no deduction for taxes or interest will
be allowed.
(g) The income from property shall include income from the letting
of any buildings along with any machinery, plant, furniture or
any other facility if the letting of such building is inseparable
from the letting of the machinery, plant, furniture or facility.
TAXATION OF CAPITAL GAINS
The Direct Taxes Code (DTC) provides that income from
transactions in all investment assets will be computed under the
head "Capital gains. The DTC provides that gains (losses) arising
from the transfer of investment assets will be treated as capital gains
(losses). These gains (losses) will be included in the total income of
the financial year in which the investment asset is transferred. The
capital gains will be subjected to tax at the rate of 30% in the case of
non-residents and in the case of residents at the applicable marginalrate.
Under the Code, the current distinction between short-term
investment asset and long-term investment asset on the basis of
the length of holding of the asset will be eliminated. In general, the
capital gains will be equal to the full consideration from the transfer
of the investment asset minus the cost of acquisition of the asset,
cost of improvement thereof and transfer-related incidentalexpenses. However, in the case of a capital asset which is
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transferred anytime after one year from the end of the financial year
in which it is acquired, the cost of acquisition and cost of
improvement will be indexed to reduce the inflationary gains.
The capital gains from all investment assets will be aggregated to
arrive at the total amount of current income from capital gains. This
will, then, be aggregated with unabsorbed capital loss at the end
of the immediate preceding financial year (unabsorbed preceding
year capital loss) to arrive at the total amount of income under the
head Capital gains.
The DTC proposes to abolish Securities Transaction Tax. Therefore,
all capital gains (loss) arising from the transfer of equity shares in a
company or units of an equity oriented fund will form part of the
computation process described above. The cost of acquisition is
generally with reference to the value of the asset on the base date or,
if the asset is acquired after such date, the cost at which the asset is
acquired. The base date will now be shifted from 1.4.1981 to
1.4.2000. As a result, all unrealized capital gains due to
appreciation during the period from1.4.1981 to 31.3.2000 will not
be liable to tax as the assesses will have an option to take the cost of
acquisition for these assets at the price prevailing as on 1.4.2000.
TAXATION OF NON-PROFIT ORGANISATIONS
The Direct Taxes Code (DTC) deals with taxation of non-
profit organizations. The Code uses the phrase permitted
welfare activities instead of the phrase "charitable purpose"
used in the current legislation to define the activities to be
pursued by these organisations. Permitted welfare activities has
been defined to mean any activity involving relief of the poor,
advancement of education, provision of medical relief,
preservation of environment, preservation of monuments or places
or objects of artistic or historic interest and the advancement of any
other object of general public utility. Advancement of any other
object of general public utility will not include any activity in the
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nature of trade, commerce or business, or any activity of
rendering any service in relation to any trade, commerce or
business, for a fee or for any other consideration, irrespective of
the nature of use, application or retention of the income from such
activity.
The Discussion Paper mentions that while trusts and
institutions established for charitable purposes have generally
enjoyed tax exemptions, the following shortcomings have been
observed in the exemption regime:-
(a) The exemption regime is complex, overlapping and
dissimilar since it varies across institutions based on their
activities.
(b) The provisions fail to meet the test of efficiency as they
provide different conditions for institutions carrying on similar
activities.
(c) The provisions also do not meet the test of equity as the
compliance cost for an institution varies depending upon the
provision of law under which the exemption is granted.
(d) The concept of income of such an institution has been the
subject matter of litigation. Should gross receipts of the
institution or the net income of the institution be reckoned as
the income? This question has been the subject matter of
extensive debate.
(e) A vexed issue is whether the institution should be
allowed to accumulate income not applied or utilized for
charitable purposes and how the accumulation should be
treated.
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(f) There is unending dispute whether a business is incidental to
attainment of the objectives of the institution or not, since
the income from incidental business is exempt from tax.
The DTC proposes a new tax regime for all trusts and institutions
carrying on charitable activities. The salient features of the new regime
are as under:-
(a) An organization shall be treated as a non-profit
organization if,-
(i) it is established for the benefit of the general
public;
(ii) it is established for carrying on permitted welfare
activities;
(iii) it is not established for the benefit of any particular
caste;
(iv) it is not established for the benefit of any of its
members;
(v) it actually carries on the permitted welfare activities
during the financial year and the beneficiaries of
the activities are the general public;
(vi) it does not intend to apply its surplus or other income
or use its assets or incur expenditure, directly or
indirectly, for the benefit of any interested person;
(vii) Any expenditure by the organisation does not ensure,
directly or indirectly, for the benefit of any interested
person;
(viii) the funds or assets of the organisation are not used or
applied, or deemed to have been used or applied,
directly or indirectly, for the benefit of any interested
person;
(ix) The surplus, if any, accruing from its permitted activities
does not ensure, directly or indirectly, for the benefit
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of any interested person;
(x) The funds or the assets of the non-profit organisation
are not invested or held in any associate concern or in
any prescribed form or mode;
(xi) It maintains such books of account and in such manner,
as may be prescribed;
(xii) It obtains a report of audit in the prescribed form
from an accountant before the due date of filing
of the return in respect of the accounts of the business,
if any, carried on by it; and the accounts relating to the
permitted welfare activities and
(xiii) It is registered with the Income-tax Department under the
Code.
(b) The tax liability of a non-profit organisation shall be 15 per
cent of the aggregate of the following:-
(I) the amount of surplus generated from the permitted
welfare activities; and
(II) the amount of capital gains arising on transfer of an
investment asset, being a financial asset;
Surplus generated from permitted welfare activities;
The amount of surplus generated from the permitted welfare
activities shall be the gross receipts as reduced by the outgoings.
The gross receipts shall be the aggregate of the following:-
(i) The amount of voluntary contributions received during
the financial year;
(ii) Any rent received in respect of a property consisting of
any buildings or lands appurtenant thereto;
(iii) The amount of any income derived from a business
which is incidental to any of the permitted welfare
activities;
(iv) Full value of the consideration received from the
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transfer of any investment asset, not being a financial
asset;
(v) Full value of the consideration received from the
transfer of any business capital asset of a
business incidental to its permitted welfare activities;
(vi) The amount of any income received from any
investment of its funds or assets; and
(vii) All other incomings, realizations, proceeds, donations
or subscriptions received from any source.
The amount of outgoings shall be the aggregate of-
(i) Voluntary contributions received during the financial
year by the non- profit organisation made with a
specific direction that they shall form part of the
corpus of the non-profit organisation;
(ii) The amount actually paid during the financial year for
any expenditure, excluding capital expenditure, incurred
wholly and exclusively for earning or obtaining any
"gross receipts";
(iii) The amount actually paid during the financial year for
any expenditure, excluding capital expenditure, on the
permitted welfare activities;
(iv) The amount of capital expenditure actually paid during
the financial year in relation to-
i. Any business capital asset of a business
incidental to any of the permitted welfare activities;
or
ii. Any investment asset, not being a financial asset.
(v) Any amount actually paid during the financial year to
any other non- profit organisation engaged in a similar
permitted welfare activity;
(vi) Any amount applied outside India during the
financial year if the amount is applied for an activity
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which tends to promote international welfare in which
India is interested and the non-profit organisation is
notified by the Central Government in this behalf.
(c) The surplus generated from permitted welfare activities
be determined on the basis of cash system of
accounting.
(d) Capital gains arising on the transfer of an investment
asset, being a financial asset, will be computed in
accordance with the provisions under the head
"Capital gains".
(e) A non-profit organisation will be prohibited from any
of its funds or holding any of its asset in any associate
concern or in any prescribed form or mode.
(f) It will be mandatory for every non-profit
organisation to register with the Income-tax
Department by making an application to the Chief
Commissioner or Commissioner concerned. The
registration, once granted, shall be valid from the
financial year in which the application is made till it is
withdrawn.
(g) The donations made to a non-profit organisation will
be eligible for deduction in the hands of the donor at the
appropriate rates.
(h) The income of any trust or institution
recognised/registered under the religious endowment
Acts of the Central Government or the
State Governments shall be fully exempt from income-
tax. However, donations to such trusts or
institutions will not enjoy any deduction in the hands
of the donor.
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SPECIAL ECONOMIC ZONES TAXATION OF EXISTING
UNITS
The Direct Taxes Code (DTC) deals with taxation of non-profit
organizations. The Code uses the phrase permitted welfare
activities instead of the phrase "charitable purpose" used in the
current legislation to define the activities to be pursued by these
organisations. Permitted welfare activities has been defined to
mean any activity involving relief of the poor, advancement of
education, provision of medical relief, preservation of environment,
preservation of monuments or places or objects of artistic or
historic interest and the advancement of any other object of
general public utility. Advancement of any other object of general
public utility will not include any activity in the nature of trade,
commerce or business, or any activity of rendering any service in
relation to any trade, commerce or business, for a fee or for any
other consideration, irrespective of the nature of use, application or
retention of the income from such activity.
It has been pointed out that while the current profit linked
deductions available to developers of Special Economic Zones
(SEZs) have been protected for their unexpired period in the DTC,
there is no mention of grandfathering of these profit linked
deductions in the case of units operating in these SEZs.
CONCEPT OF RESIDENCE IN THE CASE OF A COMPANY
INCORPORATED OUTSIDE INDIA
Direct Taxes Code (DTC) discusses the test of
residence of a person for tax purposes. The tax residence of
companies (that is, where companies are established or carry on
business) is usually based on either place of incorporation (legal
seat), location of management (real seat) or a combination of the
two. The DTC provides that a company incorporated in India will
always be treated as resident in India. However, a company
incorporated abroad (foreign company) can either be resident or
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non-resident in India. It has been proposed in the DTC that a
foreign company will be treated as resident in India if, at any time
in the financial year, the control and management of its affairs is
situated wholly or partly in India (it need not be wholly situated in
India, as at present).
It has been pointed out that under the new test for
determining residence in the DTC, a foreign company whose
control and management is partly in India will be treated as a
resident of India and thus liable for taxation in India on its
global income. The word partly used in the DTC sets a very low
threshold for regarding a foreign company as a resident in India.
Apprehensions have been expressed that it could lead to a foreign
multi-national company being held as resident in India on the
ground that some activity like a single meeting of the Board of
Directors is held in India. Also, a foreign company owned by
residents in India could be held to be resident in India as part of
the control of such company may be in India. It has been
represented that this will result in uncertainty in taxation and will
impact foreign direct investment into India. Modification of the
phrase wholly or partly has therefore been suggested.
The bill also proposed that a company incorporated outside
India will be treated as resident in India if its place of effective
management is situated in India. The term will have the same
meaning as currently laid down in the part of wealth tax to the
Code as under:
Place of effective management of the company means-
(i) The place where the board of directors of the company or its
executive directors, as the case may be, make their decisions;
or
(ii) In a case where the board of directors routinely approve the
commercial and strategic decisions made by the executive
directors or officers of the company, the place where such
executive directors or officers of the company perform their
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functions.
DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) VIS--VIS
DOMESTIC LAW
The bill also discussed about relief from double taxation.
Ordinarily, countries f o l l o w both residence-based taxation and
source-based taxation. However, if two countries tax the same
income, one based on the principle of residence and the other based
on the principle of source, it could lead to double taxation of the
same income. Hence, countries have agreed on certain principles to
avoid double taxation and accordingly, entered into Double
Taxation Avoidance Agreements (DTAA).
DTAA provides for certainty on how and when will income of a
particular kind be taxed and by which contracting State. The taxation
right of each State is defined. If one State has the right to tax a certain
income, provision is made for the other State to give tax credit or
exemption to that income in order to avoid double taxation. The DTC
provides that neither a DTAA nor the Code shall have a
preferential status by reason of its being a treaty or law. In the
case of a conflict between the provisions of a treaty and the
provisions of the Code, the one that is later in point of time shall
prevail.
The current provisions of the Income-tax Act provide that
between the domestic law and relevant DTAA, the one which is
more beneficial to the taxpayer will apply. However, this is subject
to specific exceptions e.g., the taxation of a foreign company at a
rate higher than that of a domestic company is not considered as a
less favourable charge in respect of the foreign company. Similarly it is
proposed to provide that between the domestic law and relevant
DTAA, the one which is more beneficial to the taxpayer shall apply.
However, DTAA will not have preferential status over the domestic law
in the following circumstances:-
o When the General Anti Avoidance Rule is invoked, or
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o When Controlled Foreign Corporation provisions are invoked or
o When Branch Profits Tax is levied.
WEALTH TAX
The Direct Taxes Code (DTC) deals with the levy of wealth
tax. Under the DTC, wealth-tax will be payable by an individual,
HUF and private discretionary trusts. It will be levied on net wealth
on the valuation date i.e. the last day of the financial year. Net
wealth is defined as assets chargeable to wealth-tax as reduced
by the debt owed in respect of such assets. Assets chargeable to
wealth-tax shall mean all assets, including financial assets and
deemed assets, as reduced by exempted assets. Exempted
assets include stock in trade, a single residential house or a plot
of land etc. The net wealth of an individual or HUF in excess of
Rupees fifty crore shal l be chargeable to wealth-tax at the rate of
0.25 per cent.
GENERAL ANTI-AVOIDANCE RULE
The Direct Taxes Code (DTC) deals with the provisions of the
General Anti Avoidance Rule (GAAR). The GAAR provisions
apply where a taxpayer has entered into an arrangement, the
main purpose of which is to obtain a tax benefit and such
arrangement is entered or carried on in a manner not normally
employed for bona- fide business purposes or is not at arms length
or abuses the provisions of the DTC or lacks economic
substance. The Assessing Officer in accordance with the
directions of Commissioner of Income Tax may in such cases
determine the tax consequences for the assesses by disregarding
the arrangement.
Under the Code, the power to invoke GAAR is
bestowed upon the Commissioner of Income- tax. For this
purposes the Code empowers him to call for such information as
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may be necessary. He is also required to follow the principles of
natural justice before declaring an arrangement as an
impermissible avoidance arrangement. He will determine the tax
consequences of such impermissible avoidance arrangement and
issue necessary directions to the Assessing Officer for making
appropriate adjustments. The directions issued by him will be
binding on the Assessing Officer.
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NEED, FEATURES & OTHER
SIGNIFICANT ASPECTS OF DTC
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NEED FOR DTC
The rationale for introducing DTC is to increase the efficiency and
equity of the tax system by eliminating the plethora of tax exemptions
or subsidies that create distortions. Its major policies include reduction
in the tax rates to bring more people and companies under the tax net.
India wants to modernize its direct tax laws, mainly its income tax act
which is now nearly 50 years old. The government wants a modern tax
code in step with the needs of an economy which is now the third
largest in Asia.
The new tax code is expected to widen the tax base, end unnecessary
exemptions, moderate tax rates and add to the government's funds.
Diagram: 1 Features of DTC
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SOURCE:
(http://www.google.co.in/imgres?imgurl=http://www.indianmba.com/Faculty_Column/FC1213/Fc1
213.jpg&imgrefurl=http://www.indianmba.com/Faculty_Column/FC1213/fc1213.html&usg=__ciY2C
SVQqzzSnUlBv9PI2L2YjM4=&h=303&w=550&sz=35&hl=en&start=27&zoom=1&tbnid=mJGH0odCiE
wRTM:&tbnh=91&tbnw=165&ei=gvi4TbT1Mo2wvgOCuLWiAw&prev=/search%3Fq%3Dfeatures%2B
of%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3
Disch0%2C300&itbs=1&iact=hc&vpx=711&vpy=435&dur=228&hovh=119&hovw=217&tx=93&ty=90
&page=2&ndsp=27&ved=1t:429,r:4,s:27&biw=1280&bih=709)
KEY MESSAGES OF THE DTC
Thrust of the DTC
o Improve efficiency of tax system by eliminating distortions in the
tax structure
o Simplify the complex structure of the Act, that is
incomprehensible to average taxpayer
o Introduce moderate levels of taxation and expand the tax base
o Simplify the language to enable better comprehension
o Remove ambiguity to foster voluntary compliance
o Provide stability In the tax regime based on well accepted
principles of taxation and best international practices
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SALIENT FEATURES OF THE DTC
Consolidation of provisions: in order to enable a better
understanding of tax legislation, provisions relating to definitions,incentives, procedure and rates of taxes have been consolidated.
Further, the various provisions have also been rearranged to make it
consistent with the general scheme of the Act.
Elimination of regulatory functions: traditionally, the taxing statute
has also been used as a regulatory tool. However, with regulatory
authorities being established in various sectors of the economy, the
regulatory function of the taxing statute has been withdrawn. This has
significantly contributed to the simplification exercise.
Ensure that the law can be reflected in a Form: for most taxpayers,
particularly the small and marginal category, the tax law is what is
reflected in the Form. Therefore, the structure of the tax law has been
designed so that it is capable of being logically reproduced in a Form.
Flexibility: the structure of the statute has been developed in a
manner which is capable of accommodating the changes in the
structure of a growing economy without resorting to frequent
amendments. Therefore, to the extent possible, the essential and
general principles have been reflected in the statute and the matters of
detail are contained in the rules/schedules.
Providing stability: at present, the rates of taxes are stipulated in the
Finance Act of the relevant year. Therefore, there is a certain degree of
uncertainty and instability in the prevailing rates of taxes. Under the
Code, all rates of taxes are proposed to be prescribed in the First to the
Fourth Schedule to the Code itself thereby obviating the need for an
annual Finance Bill. The changes in the rates, if any, will be done
through appropriate amendments to the Schedule brought before
Parliament in the form of an Amendment Bill.
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Reducing the scope for litigation: wherever possible, an attempt has
been made to avoid ambiguity in the provisions that invariably give rise
to rival interpretations. The objective is that the tax administrator and
the tax payer are ad idem on the provisions of the law and the
assessment results in a finality to the tax liability of the tax payer. To
further this objective, power has also been delegated to the Central
Government/Board to avoid protracted litigation on procedural issues.
Single Code for direct taxes: all the direct taxes have been brought
under a single Code and compliance procedures unified. This will
eventually pave the way for a single unified taxpayer reporting system.
Use of simple language: with the expansion of the economy, the
number of taxpayers can be expected to increase significantly. The
bulk of these taxpayers will be small, paying moderate amounts of tax.
Therefore, it is necessary to keep the cost of compliance low by
facilitating voluntary compliance by them. This is sought to be
achieved, inter alia, by using simple language in drafting so as to
convey, with clarity, the intent, scope and amplitude of the provision of
law. Each sub-section is a short sentence intended to convey only one
point. All directions and mandates, to the extent possible, have been
conveyed in active voice. Similarly, the provisos and explanations have
been eliminated since they are incomprehensible to non-experts. The
various conditions embedded in a provision have also been nested.
More importantly, keeping in view the fact that a tax law is essentially a
commercial law, extensive use of formulae and tables has been made.
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DEVELOPMENT OF DTC
Substantial amendments to Income-tax Act, 1961, (Act) by various
Finance Acts and amending statutes.
Concerns raised by taxpayers and tax administrators on the complex
structure of the laws
o Numerous amendments have rendered the Act
incomprehensible
o Has resulted in increased cost of compliance and administration
o Difference in interpretation on a number of issues has led to
litigation
o Conflicting judgements rendered by Courts at various levels
have compounded the problem further
Several attempts to reform the tax laws since the 1990s
2005-06 Budget : Intention to undertake major tax reforms
o To improve Tax-GDP ratio, expand taxpayer base, increase tax
compliance and make tax administration efficient
o Proposal to introduce simplified Income Tax Bill
2007-08 Budget : Proposal to release DTC for public discussion
12 August 2009 : DTC Bill, 2009 and Discussion Paper released
o 285 sections, 18 schedules, power to make rules on several
aspects
o 318 terms defined in Definition Section
DTC to replace the Act and come into force on 1 April, 2011
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REMOVAL OF EXEMPTED INCOME
New DTC removes most of the categories of exempted income. ULIPs,
Term deposits, NSC, house loan, principal repayment, stamp duty and
registration fees on purchase of house property will loose tax benefits.
Surcharge and education cess are abolished and Tax exemption on
LTA (leave travel allowance) is abolished.
TERMS ABOLISHED UNDER DTC
Earlier Income Tax Act and Wealth tax Act (Covering Income Tax,
TDS, DDT, FBT and Wealth taxes) are abolished and single code of
Tax, DTC in place.
Concept of Assessment year and previous year is abolished. Only the
Financial Year terminology exists.
Only status of Non Resident and Resident of India exits. The other
status of resident but not ordinarily resident goes away
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TAX SLAB RATE OF DTC
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TAX SLAB RATE OF DTC
The following are the newly announced tax slabs for individuals
For Individual (Men, Women & HUF)
The big change is that the same tax slabs will apply to men and
women. Now both are eligible for Rs 2 lakhs tax free exemption,
whereas previously it used to be up to Rs 1.6 lakhs for men and up to
Rs 1.9 lakhs for women.
TABLE: 2
Tax RateDTC
ParliamentaryBill (Aug 2010)
Current Slab underIncome Tax Act Original DTC
Nil Up to Rs 2,00,000 Up to Rs 1,60,000 Up to Rs. 1,60,000
10%From Rs 2,00,001
to Rs 5,00,000From Rs 1,60,001 to
Rs 5,00,000From Rs 1,60,001 to
Rs 10,00,000
20%From Rs 5,00,001to Rs 10,00,000
From Rs 5,00,001 toRs 8,00,000
From Rs 10,00,001to Rs 25,00,000
30%Above Rs10,00,000
Above Rs 8,00,000 Above Rs 25,00,000
SOURCE: (http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-
tax-slabs-leads-to-savings/)
For men or women earning up to Rs 8 lakhs the net annual tax saving
under the new DTC bill is going to be a maximum of Rs 4,000.
For men or women earning between Rs 8 lakhs to Rs 10 lakhs the net
annual tax saving is going to be a maximum of Rs 24,000.
For men or women earning above Rs 10 lakhs, there is no additional
net annual saving available under the direct tax code other than the Rs
24,000 as mentioned in the above example as well.
http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/ -
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For Senior Citizens
For those above 65 years of age, the tax exemption limit has been
raised to Rs 2.5 lakhs from Rs 2.4 lakhs, for a net new saving of Rs
1,000 per annum.
TABLE: 3
Tax RateDTC
ParliamentaryBill (Aug 2010)
Current Slabunder Income
Tax ActOriginal DTC
Nil Up to Rs 2,50,000 Up to Rs 2,40,000 Up to Rs. 2,40,000
10%From Rs 2,50,001 to
Rs 5,00,000From Rs 2,40,001
to Rs 5,00,000From Rs 2,40,001 to
Rs 10,00,000
20%From Rs 5,00,001 to
Rs 10,00,000From Rs 5,00,001
to Rs 8,00,000From Rs 10,00,001 to
Rs 25,00,000
30% Above Rs 10,00,000 Above Rs 8,00,000 Above Rs 25,00,000
SOURCE: (http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/)
TAX DEDUCTIONS
Currently, the Income Tax Act offers individuals an annual deduction of
Rs 1 lakh under 80C that can be used for instruments such as PPF (up
to cap of Rs 70,000), PF, NPS scheme, ELSS, premium for pure life
insurance or ULIP, principal repayment of home loan, NSC, fixed
deposits with a maturity of five years, payment of tuition fees for full-
time education for up to 2 children. In the current financial year (April
2010 through March 2011), one can get an additional deduction of Rs
20,000 for investing in certain notified infrastructure bonds under
80CCF. Additionally, 80D gives a deduction of Rs 15,000 towards
medical insurance.
http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/http://www.thewealthwisher.com/2010/10/16/direct-tax-code-dtc-impact-new-tax-slabs-leads-to-savings/ -
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Under the DTC Bill, some of the above deductions have changed.
What was previously available as the 80C deduction of Rs 1 lakh is
now available as a deduction towards investments only in retiral
accounts such as PPF, PF, NPS, and in savings schemes as notified
by the Government. These are all eligible for taxation under EEE
treatment. EEE refers to the tax incidence exempt at time of
investment, exempt during accumulation, and exempt at withdrawal.
These will be available for the tax year starting April 1, 2012.
Additionally, an aggregate deduction of Rs 50,000 is available for
premium for pure life insurance, health insurance and tuition fees for
two children.
As a result, the total deduction available is Rs 1.5 lakhs.
The previous 80C deduction investments in ELSS and ULIPs
were eligible for the Rs 1 lakh deduction, as was a deduction towards
repayment of principal for an outstanding home loan. Under the DTC
Bill all these three options are no longer eligible for a deduction.
TABLE: 4
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SOURCE:(http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Upload
s/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookin
dia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=80
0&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=K
vq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2B
code%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000
%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty
=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709)
POST DTC TAX LIABILITIES AND SAVINGS
TABLE: 5
TaxableIncome(Rs inlakhs)
Men less than 65 years Women less than 65years Senior Citizens
PostDTC
Liability(Rs)
Savings(Rs.)
PostDTC
Liability(Rs)
Savings(Rs.)
PostDTC
Liability(Rs)
Savings(Rs.)
1.6 Nil Nil Nil Nil Nil Nil
1.9 Nil 3090 Nil Nil Nil Nil
2 Nil 4120 Nil 1030 Nil Nil2.4 4000 4240 4000 1150 Nil Nil
2.5 5000 4270 5000 1180 Nil 1030
4 20,000 4720 20,000 1630 15,000 1480
5 30,000 5020 30,000 1930 25,000 1780
8 90,000 6820 90,000 3730 85,000 3580
8.5 1,00,000 12,270 1,00,000 9180 95,000 9030
10 1,30,000 28,620 1,30,000 25,530 1,25,000 25,380
12.5 2,05,000 30,870 2,05,000 27,780 2,00,000 27,630
Above table shows the post liability of tax after DTC come into
existence at different level of income. Along with it, it also shows how
much the tax saving can be possible through it. For example: when
income of a man below 65 years of age, is 1.90 lakhs, under the DTC
the tax liability will be nil but according to current income tax the tax
liability will be Rs 3,090. So this amount under DTC will totally save.
http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect%2Btax%2Bcode%26hl%3Den%26biw%3D1280%26bih%3D709%26gbv%3D2%26tbm%3Disch0%2C34000%2C3400&itbs=1&iact=hc&vpx=265&vpy=284&dur=1577&hovh=168&hovw=301&tx=202&ty=98&page=7&ndsp=29&ved=1t:429,r:1,s:165&biw=1280&bih=709http://www.google.co.in/imgres?imgurl=http://cms.outlookindia.com/Uploads/outlookmoney/2010/20100825/page28_20100922.jpg&imgrefurl=http://money.outlookindia.com/article.aspx%3F267163&usg=__2pYAMuRqwLf32AkBx8p5q7o9G_U=&h=447&w=800&sz=78&hl=en&start=165&zoom=1&tbnid=QZTbIFHz_UY3AM:&tbnh=129&tbnw=207&ei=Kvq4TeLlAofMuAPU0ayiAw&prev=/search%3Fq%3DTAX%2BSLAB%2BOF%2Bdirect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SCHEDULES TO DTC
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SCHEDULES TO DTC
Arrangement of Schedules
The 1st Schedule. Rates of Income-tax
The 2nd Schedule. Rates of other taxes
The 3rd Schedule. Rates for deduction of tax at source
The 4th Schedule. Rate for deduction of tax at source in case of non-resident deductee
The 5th Schedule. Procedure for recovery of tax
The 6th Schedule. Income not included in the total income
The 7th Schedule. Persons, entity or funds not liable to Income-tax
The 8th Schedule. Computation of profits of the insurance business
The 9th Schedule. Computation of Income from Special Sources
The 10th Schedule. Computation of Profits of Business of Operating a Qualifying Ship
The 11th Schedule. Computation of Profits of the Business of Mineral Oil or Natural Gas
The 12th Schedule.
Computation of Profits of the Business of Developing of a SpecialEconomic Zone, Manufacture or Production of Article or Things orProviding of any Service by a Unit Established in a Special Economic
Zone
The 13th Schedule. Computation of profits of a Specified business
The 14th Schedule. Determination of income on a presumptive basis
The 15th Schedule. Depreciation
The 16th Schedule. Deduction for contributions / donations
The 17th Schedule. Determination of cost of acquisition in certain cases
The 18th Schedule. Minerals and group of associated minerals
The 19th Schedule. Approved PF, Gratuity and Superannuation Funds
The 20th Schedule. Computation of Income Attributable to a controlled Foreign Company
The 21st Schedule. Orders Appealable before Commissioner (Appeals)
The 22nd Schedule. Deferred Revenue Expenditure Allowance
http://finotax.com/dtc/sch1.htmhttp://finotax.com/dtc/sch2.htmhttp://finotax.com/dtc/sch3.htmhttp://finotax.com/dtc/sch4.htmhttp://finotax.com/dtc/sch5.htmhttp://finotax.com/dtc/sch6.htmhttp://finotax.com/dtc/sch7.htmhttp://finotax.com/dtc/sch8.htmhttp://finotax.com/dtc/sch9.htmhttp://finotax.com/dtc/sch10.htmhttp://finotax.com/dtc/sch11.htmhttp://finotax.com/dtc/sch12.htmhttp://finotax.com/dtc/sch13.htmhttp://finotax.com/dtc/sch14.htmhttp://finotax.com/dtc/sch15.htmhttp://finotax.com/dtc/sch16.htmhttp://finotax.com/dtc/sch17.htmhttp://finotax.com/dtc/sch18.htmhttp://finotax.com/dtc/sch19.htmhttp://finotax.com/dtc/sch20.htmhttp://finotax.com/dtc/sch21.htmhttp://finotax.com/dtc/sch22.htmhttp://finotax.com/dtc/sch22.htmhttp://finotax.com/dtc/sch21.htmhttp://finotax.com/dtc/sch20.htmhttp://finotax.com/dtc/sch19.htmhttp://finotax.com/dtc/sch18.htmhttp://finotax.com/dtc/sch17.htmhttp://finotax.com/dtc/sch16.htmhttp://finotax.com/dtc/sch15.htmhttp://finotax.com/dtc/sch14.htmhttp://finotax.com/dtc/sch13.htmhttp://finotax.com/dtc/sch12.htmhttp://finotax.com/dtc/sch11.htmhttp://finotax.com/dtc/sch10.htmhttp://finotax.com/dtc/sch9.htmhttp://finotax.com/dtc/sch8.htmhttp://finotax.com/dtc/sch7.htmhttp://finotax.com/dtc/sch6.htmhttp://finotax.com/dtc/sch5.htmhttp://finotax.com/dtc/sch4.htmhttp://finotax.com/dtc/sch3.htmhttp://finotax.com/dtc/sch2.htmhttp://finotax.com/dtc/sch1.htm -
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EXPERTS VIEWS ON DTC
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Experts Views on DTC
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. writes Dilip
Maitra.
Source:DH News Service
(http://www.deccanherald.com/content/19934/decoding-direct-tax-
code.html)
Talking to Deccan Herald, KPMG Executive Director Personal Taxation,
and IT & ESOP Vikas Vasalsaid The new proposals are in the right
direction. They will simplify regulations and reduce unnecessary
litigations significantly.
Source: (http://www.deccanherald.com/content/19934/decoding-direct-
tax-code.html)
Agreed Bangalore Chamber of Industry & Commerce (BCIC) President
K R Girish. The Code is a completely new law and not an amendment
of the existing Income Tax Act. This is a commendable change as one
has always experienced tinkering of existing laws, According to KPMGpartner i.e. K R Girish, there is a drastic deviation from the direct tax
roadmap put forward by the Kelkar Commission in the new code, The
new move to bring in tax clearance certificate for business men before
leaving the country will adversely affect the investment prospect in the
country, he said, adding There is a marked mismatch between the
governments economic policy and the provisions in the new tax code.
This will give a bad name for our country overseas.
Source:(http://www.deccanherald.com/content/19934/decoding-direct-
tax-code.html)
"Considering the many drafting blunders, inequities and anomalies in
the revised Direct Taxes Code placed before Parliament, DTC virtually
appears to be beyond repair. It needs to be dumped in the larger
interests of taxpayers as well as the revenue generated," Eminent tax
expert Mukesh Patel Addressing the FGI members on 'Direct Taxes in
the Union Budget 2011' in Vadodara,
http://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.htmlhttp://www.deccanherald.com/content/19934/decoding-direct-tax-code.html -
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Source:
(http://www.businessworld.in/bw/2011_03_03_Dump_Direct_Tax_Code
_Says_Tax_Expert.html)
The postponement, according to Krishan MalhotraExecutive Director of KPMG, is logical. It technically was
looking very difficult to implement from April 1, next year. The
procedure will take timeat least 6 months.
Source:(http://www.moneycontrol.com/news/economy/direct-tax-code-
tabled-what-do-experts-makeit_481782.html)
In order to execute the new laws, including the combating financing of
terrorism (CFT) introduced in the code, the corporate as well as the
government require preparation time, says Ajay Kumar Executive
Director of PricewaterhouseCoopers (PwC).
Source:(http://www.moneycontrol.com/news/economy/direct-tax-code-
tabled-what-do-experts-makeit_481782.html)
The bill seems to resemble the current income tax more rather than
the original Direct Tax Code which we saw. Some of the language
seems to be again reverting back to the earlier or the current tax act.
This, Amitabh Singh Tax Partner at E&Y considers to be clear
negative. Largely it may be that when it went into the law ministry, they
clearly didnt have time to grapple with a new set of wordings and the
way the whole language was drafted and they would have been more
comfortable with a language on which the jurisprudence and the courtcases have already deliberated, he reasons.
Source:(http://www.moneycontrol.com/news/economy/direct-tax-code-
tabled-what-do-experts-makeit_481782.html)
Participants also criticized the new law to tax NGOs who are doing well
in the country. It is a retrograde move to tax 15 per cent of the
unutilized assets of NGOs in the country who have done exemplary
http://www.businessworld.in/bw/2011_03_03_Dump_Direct_Tax_Code_Says_Tax_Expert.htmlhttp://www.businessworld.in/bw/2011_03_03_Dump_Direct_Tax_Code_Says_Tax_Expert.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.moneycontrol.com/news/economy/direct-tax-code-tabled-what-do-experts-makeit_481782.htmlhttp://www.businessworld.in/bw/2011_03_03_Dump_Direct_Tax_Code_Says_Tax_Expert.htmlhttp://www.businessworld.in/bw/2011_03_03_Dump_Direct_Tax_Code_Says_Tax_Expert.html -
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