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Tel: + 91 (0) 22 6619 8400 As a first step towards simplifying and bringing about structural changes in
Fax: + 91 (0) 22 6619 8401
direct taxes, the new Direct Taxes Code (DTC) Bill 2009 has been released for
Delhi public debate. This is expected to be presented in the winter session 2009 of
MCT House, One Okhla
Centre, Block A, Okhla the Parliament. The Code, once enacted, is proposed to be effective from 1st
Institutional Area,
of April 2011.
New Delhi, 110 025.
Tel : +91 (0) 11 6627 6000 The Code attempts to simplify the language to enable better comprehension
Fax : + 91 (0) 11 6627 6011 and remove ambiguity. It is expected that this would specially meet the
Bangalore aspirations of the young and professionally mobile population. The Code has
Deloitte Centre, Anchorage II,
been drafted considering the “principles that have gained international
100/2, Richmond Road,
Bangalore 560 025. acceptance”.
Chennai
The due date of filing tax return has been advanced to 30 June from 31
No.52, Venkatanarayana July for individuals who do not have business income.
Road,
7th Floor, ASV N Ramana While the tax rates remain the same, major changes are proposed in the
Tower,
T-Nagar, income slabs. Surcharge and Education Cess have been removed.
Chennai 600 017.
Tel: +91 (0) 44 6688 5000 The concept of “Resident but not ordinarily Resident” has been omitted.
Fax: +91 (0) 44 6688 5019
Introduction of Exempt Exempt Tax (EET) method for taxation of savings
introduced as against the current Exempt-Exempt -Exempt (EEE) method.
Kolkata
Bengal Intelligent Park A certificate of Residency to be produced for claiming treaty benefits.
Building, Alpha, 1st floor,
Plot No –A2, M2 & N2,
Block – EP & GP Sector – V, India not to provide credit for taxes paid overseas in respect of India
Salt Lake Electronics sourced income, where there is no treaty in place.
Complex,
Kolkata - 700 091.
Automatic treaty override, where the treaty provisions are more beneficial,
Tel : + 91 (0) 33 6612 1000 done away with. The DTC provides that the later of the Code or the treaty
Fax : + 91 (0) 33 6612 1001
would prevail.
Vadodara citizens.
Chandralok,
31, Nutan Bharat Society, Currently, an education cess of 3% is applicable on the taxes, and hence the
Alkapuri, Vadodara – 390 007
maximum marginal rate is 30.90%. The proposed maximum marginal rate is
Tel: + 91 (0265) 2233 3776 30%.
Fax: +91 (0265) 2233 9729
Residential Status and Scope of Income
the financial year immediately succeeding such financial year, provided the
individual was a non-resident for nine years immediately preceding the
financial year in which he ceased to be a non-resident.
The incomes have broadly been categorized into “Income from ordinary
sources” and “Income from special sources”.
Set off & Possible within the head Set off of loss from one
Carry Ordinary Sources. However, source with profits from
forward of losses under the head Capital another source not
losses Gains and from speculative permissible.
business are ring fenced and
cannot be set off from income
under any other head
Tax Rates At normal rates after basic At rates specified, basic
exemption, as per slab rates exemption not available.
provided for
It would also include the following for which currently exemptions are available:
There are no benefits available for self occupied house property (currently,
interest costs not exceeding INR 150,000 is allowed as a deduction). Where
the property is deemed to be let out, or actually let out, the income shall be the
gross rent less specified deductions.
Gross rent would be the higher of the contractual rent or presumptive rent
calculated at 6% of
The deductions available in the case of a rented property / deemed to be let out
property would include
Capital Gains
Capital gains arising from transfer of personal effects and agricultural land to be
excluded from the ambit of taxation. Base date for determining cost of
acquisition for the purpose of computing capital gains shifted from 1 April 1981
to 1 April 2000.
Losses under the head capital gains would be ring fenced and such loss shall
not be allowed to be set off against income under other heads. Further, such
loss (as is the case with loss under other heads) is allowed to be carried
forward indefinitely. Currently, the period for which losses can be carried
forward, is limited to 8 years.
Residuary income would comprise any income which does not form part of any
other head of income under ordinary sources / special sources.
Tax Incentives
Comments
The Code will need to be read with the related rules / notifications which are
expected to be notified at a later point. The full impact will be known once these
are available. Nevertheless, the Code broadly indicates the intent of the
Government to move towards a simpler tax structure with lower tax rates,
higher compliance through stringent penalties, resulting in a wider tax base.
While most of the tax deductions and exemptions have been done away with,
the government has been fairly generous in increasing the slabs of income
resulting in lowering tax liabilities for all.
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