DIRECT TAXES CODE 2009 : AT A GALANCE

DIRECT TAXES CODE 2009 : AT A GALANCE


-Tax law in simple and easy to understand language.
· The new Income Taxes Code to be applicable from 1st April, 2011. 
· Personal Income tax rates slashed substantially. 
           o Upto 10 lacs (less existing basic exemption limit) : 10%
           o Next 15 lacs : 20%
           o Over 25 lacs : 30%
· All Companies to pay tax @ 25%.
· MAT @ 2% of gross assets. Even loss making companies to pay MAT.
· No provision for MAT credit.
· Dividend distribution tax to continue @ 15% of divided.
.Foreign companies also to pay 15% of branch profit tax.
· Firms to continue to pay tax @ 30%.
· No cess or surcharge in any case.
· Agricultural income continues to be included in taxable income only for rate purposes.
· Wealth tax exemption limit raised to 50 crores. To include financial assets like shares.
· Limit of savings increased from 1 lac to 3 lacs.
· Savings to be taxed at the time of maturity under the EET system. Savings before 1-4-2011 not taxable.
· Law made stricter for defaulters and non-filers.
· The new law to apply in place of existing direct tax avoidance agreements with other countries.
· Losses allowed to be carried forward indefinitely.
· TDS to be deposited in the year of deduction. For last quarter, TDS can be deposited till due date of filing ITR. If TDS not deposited within 2 years from end of year of deduction, expenditure shall be disallowed.
· TDS rates reduced in some cases like payment to contractors and rent of machinery to 1%.

· Due dates of filing income tax returns :
o Companies and other audit cases : Aug. 31
o Others : June 30
· Revised return or belated return can be filed within 21 months from the end of the financial year.
· Valuation of perquisites like rent free accommodation to be same in case of all employees whether in government or private sector.
· Gratuity to be exempt only if invested in a retirement fund.
· No deduction of interest upto Rs. 1.50 lacs for self occupied properties.
· Standard deduction from Gross Income from house property reduced from 30% to 20%.
· No distinction between short term and long term capital gains. All capital gains to be taxed at normal rates.
· 2000 to be base year for indexation in case of capital gains.
· Security Transaction Tax to be abolished.
· Exemptions u/s 54 etc. from capital gains abolished.
· For business, profit linked incentives removed. Only revenue and capital expenditure shall be allowed to be amortised. The remaining profit shall be taxable.
· Area based incentives also removed. Existing business concerns not affected.
· Limit of turnover for presumptive taxation raised to 1 cr.

Sources of income will have folowing names. 
 A. Income from employment

B.Income from house property

C. Income from business

D. Capital gains

E. Income from residuary sources.

Key proposals for businesses:
- Taxation of all non profit organisations rationalised
- Profits of non-life insurance biz to be disclosed annually
- Govt may enter overseas agreements for double taxation avoidance
- No tax deduction on interest payable to banking cos, insurers

 Click here to download
1.Direct tax code bill 2009:

2.Direct tax code discussion paper: 


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