Direct Tax Code

Union Cabinet on Thursday cleared the new Direct Tax Code Bill that proposes to raise the basic exemption limit for individual tax payers from Rs 1.6 lakh to Rs 2 lakh. So there will be no tax on incomes below Rs 2 lakh. The exemption for senior citizens has been raised to Rs 2.5 lakh, up from 2.25 lakh at present. The tax code will now be sent to a standing committee for clearance and is most likely to be presented in Parliament on Monday New Income tax slab 0 -2 lk Nil 2 -5 10% 5- 10 20% >10 30% The whole objective of the Direct Tax Code is to provide predictability because now the tax rates will not be part of the Finance Act. It will be a part of the schedule which will be approve by Parliament along with the Direct Tax Code. Direct Tax Code incorporates all three direct tax act; IT Act of 1961, Wealth Tax of 1957, Dividend Distribution Tax of 1997. All these are combined in Direct Tax Code," said Mukherjee.
Most probably on Monday it (DirectTax Code) will be introduced in Parliament. It will be put on the website as soon as it's introduced in Parliament," said Revenue Secretary Sunil Mitra. The Bill also seeks to remove surcharge and cess on corporate tax, providing relief to business houses. According to the new direct tax code corporate tax rate will be 30 per cent including all taxes, down from the existing 33 per cent. For senior citizens and females, the tax slabs are likely to be relaxed further, they added. "The whole objective is that a plethora of exemptions will be limited. (Income) tax slabs will be three. Rate of taxes will be taken in the schedule so that they need not be changed every year," Mukherjee said. On the corporate tax, the Finance Minister said it is sought to be retained at the present level of 30 per cent, but there will not be any surcharge or cess on it. Income between Rs 2-5 lakh is likely to attract a rate of 10 per cent, 20 per cent for Rs 5 -10 lakh bracket and 30 per cent above Rs 10 lakh. At...

Direct Tax Code And Retail Industry

Abstract: The new Direct tax code is going to replace the existing income tax act of 1961 in India. It is expected to be passes in the monsoon session of 2010 and is expected to be enforced from 1st April 2011. It will completely overhaul the existing tax proposals for not only individuals but also for corporate houses and

foreign residents. Tax rates and slabs have been modified. It proposes a significant increase in the tax rates and slabs for persona income tax and the tax deduction limit available on savings from Rs. 1 lakh at present to Rs. 3 lakh. It has also proposed to reduce the corporate tax rate from 33% (including surcharge) to 25% which will benefit various sectors in the economy. Retail industry is also one of the industries which are going to be affected by the new direct tax code with the change in disposal income with the individual and change in corporate tax. In the given research paper, researcherhas found that the Direct Tax Code will have a positive impact on the retail industry as it would help the Indian Retail Industry to face the challenges likewise to get more investment and better infrastructure but at some point it will be neutral so the net effect will be the positive one for the Indian Retail Industry .

Direct Tax Code India

| | | | Direct Tax Code | The direct tax code seeks to consolidate and amend the law relating to all direct taxes, namely, income-tax, dividend distribution tax, fringe benefit tax and wealth-tax so as to establish an economically efficient, effective and equitable direct tax system which will facilitate voluntary compliance and help increase the tax-GDP ratio. Another objective is to reduce the scope for disputes and minimize litigation. It is designed to provide stability in the tax regime as it is based on well accepted principles of taxation and best international practices. It will eventually pave the way for a single unified taxpayer reporting system.The salient features of the code are: * 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 subsection 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. * Reducing the scope for litigation: wherever possible, an attempt has been made to avoid ambiguity in the...

Direct Tax Code- M.Govind Rao, R. Kavita Rao

insight

Direct taxes Code: need for greater Reflection M Govinda Rao, R Kavita Rao A new tax code that overhauls the complexities that have emerged in the Income Tax Act of 1961 has been long overdue. The draft Direct Taxes Code put out by the Finance Ministry for discussion and comment does just that in a number of areas. At the same time questions must be posed of the sweeping reduction in rates and restructuring of slabs in income tax, which are likely to rob the exchequer of a significant amount of income. Questions must also be asked of the proposed taxation of not-for-profit organisations. M Govinda Rao (mgr@nipfp.org.in) and R Kavita Rao (kavita@nipfp.oirg.in) are with the National Institute of Public Finance and Policy. Economic & Political Weekly EPW n the 2009-10 budget speech, Union Finance Minister Pranab Mukherjee promised to build a trust based simple, neutral tax system with almost no exemptions and low rates designed to promote voluntarycompliance and towards that end, committed to unveil a Draft Code of Direct Taxes
for public discussion. The purpose of the new code is to simplify the enormous complexities in direct taxes since the enactment of Income Tax Act, 1961. As stated by the finance minister, the objective of the new code is, to improve the efficiency and equity of our tax system by eliminating distortions in the tax structure, introducing moderate levels of taxation and expanding the tax base. In fact, periodic redrafting of the code is necessary to update the tax system to conform to emerging economic realities and clean up the complexities it acquires over the years. Income taxes both individual and corporate have indeed become extremely complex over the years. The plethora of exemptions and tax preferences to fulfil a variety of objectives has not only eroded the base, it has also complicated the tax system with unintended consequences on resource allocation. The complexities in the Income Tax Act have only made...

New Tax Code In India

DIRECT TAX CODE A step towards tax reforms in India In his recent Budget speech, finance minister Pranab Mukherjee said, Tax reform, like all reforms, is a process and not an event. As a step towards such reform, the finance minister fulfilled his promise of releasing the draft direct tax code, which provides a blueprint for the future of the Indian direct tax regime. One positive aspect of the new tax code is the relative simplicity of the language used. On the structural side, the elimination of numerous provisos and explanations is a welcome step. PricewaterhouseCoopers analyses the impact of key provisions proposed under the direct tax code vis--vis the current position under the Income-tax Act, 1961. Particulars Existing provisions Proposals Impact Particulars Existing provisions MAT payable at 16.995% of book profits (net profit as per profit & loss account +/- prescribed adjustments). MAT paid is available as tax credit in subsequent years. Proposals Base for computingMAT is to

be shifted from book profits to gross assets. The rate of MAT is proposed to be 2% for all companies (0.25% for banking companies). Value of gross assets will be the value of the gross block of fixed assets, value of capital work-in-progress and book value of all other assets, less accumulated depreciation on fixed assets and debit balance of profit and loss account. MAT paid will not be available as tax credit in subsequent years. Impact The shift of basis for levy of MAT from profits to assets is likely to result in tax liability even for loss-making companies. No provision has been made for reduction of debts owed by the company in computing the gross assets. This levy is likely to significantly affect companies that undertake capital-intensive projects and which are highly leveraged. Companies with multi-tiered holding structures will be worst hit as the tax will be levied at each level, resulting in effective multiple taxation. The non-availability of MAT credit will result...