Vous êtes sur la page 1sur 9

BRIEF COMPARISON OF EXISTING PROVISIONS OF INCOME TAX ACT, 1961, DIRECT TAXES CODE,2009

AND THE REVISED DISCUSSION PAPER,2010

S. No. Particulars Existing Initial Provisions of DTC Revised Provisions of DTC as per
Provisions Discussion Paper

1. MAT Based on Book Profits Basis proposed to be shifted It is proposed to compute MAT with reference to
from „Book Profits‟ to „Value of Book Profits i.e. Existing provisions have been
Gross Assets‟ retained

2. TAX TREATMENT Exempt Exempt Exempt Exempt Tax (EET) It is proposed to provide the EEE method of
OF SAVINGS Exempt (EEE) method method of taxation for savings taxation for
of taxation of savings proposed
Provident Fund (GPF), Public Provident Fund
for certain instruments
(PPF), 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
i.e. Existing provisions have been retained

3. TAXATION OF Salary, Perquisites It provides that “Income from It is proposed that employer‟s contribution to an
INCOME FROM and Profits in lieu of employment” will be gross salary approved provident fund, superannuation fund and
EMPLOYMENT, salary are taxed as reduced by the aggregate New Pension Scheme within the limits prescribed
RETIREMENT based on separate set amount of permissible shall not be considered as salary in the hands of
BENEFITS AND of provisions. deductions. The term salary is the employee. Also, retirement benefits received by
PERQUISITES defined to include the value of an employee will be exempt subject to specified
perquisites, retirement benefits, monetary limits. The method of valuation of
profits in lieu of salary and other perquisites will be appropriately provided in the
specified payments. rules.

It is proposed that perquisites in relation to medical


facilities/reimbursement provided by an employer to
its employees shall be valued as per the existing
law with appropriate enhancement of monetary
limits. It is also clarified that the DTC does not
propose to compute perquisite value of rent free
accommodation based on market value.

4. TAXATION OF No concept of New concept of presumptive rent It is proposed that Gross rent will not be computed
INCOME FROM presumptive rent. proposed which insisted on at any presumptive rate.
HOUSE calculating Gross Rent @ six per
PROPERTY cent per annum of the ratable
value fixed by the local authority
or cost of acquisition where no
such value prescribed.
30% deduction for 20% of the gross rent towards
repairs and repairs and maintenance as
No comments.
maintenance available against thirty per cent at present.

Deductions on self In the case of a self-occupied


In case of any one house property which has not
occupied properties property where the gross rent is
been let out, an individual or HUF will be eligible for
available upto deemed to be nil, no deduction
deduction on account of interest on capital
maximum of Rs. 1.5 for taxes or interest will be
borrowed subject to maximum limit of Rs. 1.5 Lacs.
Lacs allowed.

5. TAXATION OF Presently Capital The DTC provides that gains Capital Asset held for a period of more than one
CAPITAL GAINS Gains are taxable as (losses) arising from the transfer year from the end of the financial year in which
Long Term or Short of investment assets will be it is acquired-
Term based on the treated as capital gains (losses)
a. Listed Equity Share/units of Equity oriented
period of holding of and would be subjected to tax at
Mutual Fund
assets. the rate of 30% in the case of
A flat deduction at a specified percentage of
non-residents and in the case of
capital gains/losses shall be allowed (without any
residents at the applicable
A special provision is indexation) and the remaining amount shall be
marginal rate.
also there that taxed as Normal Income at applicable rates.
exempts the LTCG on
b. Other Assets
Listed Equity
Share/units of Equity
Distinction between short-term Indexation benefits would be available as per
oriented Mutual Fund
investment asset and long-term base year of 1.4.2000 and the gains shall be
if traded on
investment asset on the basis of taxed as Normal Income at applicable rates.
recognised stock
the length of holding eliminated.
Capital gains on assets held for less than one
exchange.
Benefit to Indexation to transfer year from the end of Financial Year in which
Similarly lower rate of
after one year from the end of asset is acquired-
15% is there for
the financial year in which it is
No specified deduction or indexation would be
STCG on Shares.
acquired. The base date for
allowed. It will be included in the total income and
Indexation will now be shifted
will be charged to tax at the rate applicable to
from 1.4.1981 to 1.4.2000.
taxpayer.

Otherwise also LTCG It is proposed that the income arising on purchase


are being taxed @ and sale of securities by an FII shall be deemed to
concessional tax rate be income chargeable under the head capital
of 20%. gains. The capital gains arising to FIIs shall not be
subjected to TDS and they will be required to pay
tax by way of advance tax on such gains as is the
existing practice.

The DTC proposes to abolish Accordingly, STT is proposed to be calibrated


Securities Transaction Tax. based on the revised taxation regime for capital
gains and flow of funds to the capital market.
New Capital Gains Savings It is also proposed not to introduce the Capital
Scheme proposed Gains Savings Scheme.

6. TAXATION OF Activities of charitable Activities of „Permitted Welfare It is proposed that NPOs already registered under
NON-PROFIT purpose covered Activities‟ covered. the Income-tax Act, 1961 and holding valid
ORGANISATIONS registration on the date on which DTC comes into
The DTC has proposed a new
effect, would not be required to apply for fresh
tax regime for all trusts and
registration under the DTC.
institutions carrying on charitable
activities.

However, they would be required to provide


Detailed guidelines have also additional information to facilitate the administration
been prescribed in this respect of the new provisions.

The income of public religious institutions will be


exempt subject to fulfilment of all the specified
conditions.

The words Charitable Purpose have been retained


and relaxation has been given in spending and
carry forward of the surplus

7. SPECIAL Income of SEZ units is The Code does not allow area- Specific provisions for protecting such deduction for
ECONOMIC Tax Free subject to based exemptions. Area-based the unexpired period have been provided in the
ZONES – specified conditions exemptions that are available DTC in the case of SEZ developers.
TAXATION OF under the Income Tax Act, 1961
EXISTING UNITS will be grandfathered
A similar provision to protect profit linked
deductions of units already operating in SEZs for
the unexpired period will also be incorporated.

8. CONCEPT OF Presently, a foreign DTC proposes that a foreign It is proposed that a company incorporated outside
RESIDENCE IN company is treated as company will be treated as India will be treated as resident in India if its „place
THE CASE OF A resident in India if, at resident in India if, at any time in of effective management‟ is situated in India.
COMPANY any time in the the financial year, the control
INCORPORATED financial year, the and management of its affairs is
Place of effective management of the company
OUTSIDE INDIA control and situated „wholly or partly‟ in India
means: (i) the place where the board of directors of
management of its
the company or its executive directors, as the case
affairs is situated
may be, make their decisions; or
„wholly‟ in India
(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 functions.

As an anti-avoidance measure, in line with


internationally accepted practices, it is also
proposed to introduce Controlled Foreign
Corporation (CFC) provisions so as to provide that
passive income earned by a foreign company
which is controlled directly or indirectly by a
resident in India, and where such income is not
distributed to shareholders resulting in deferral of
taxes, shall be deemed to have been distributed.
Consequently, it would be taxable in India in the
hands of resident shareholders as dividend
received from the foreign company.

9. DOUBLE Present provisions The DTC provides that neither Though, it is proposed to provide that between the
TAXATION state that out of DTAA DTAA nor the Code shall have a domestic law and relevant DTAA, the one which is
AVOIDANCE or Act, whichever is more beneficial to the taxpayer shall apply,
Preferential status by reason of
AGREEMENT more beneficial to however, DTAA will not have preferential status
its being a treaty or law. In the
(DTAA) VIS-À-VIS assessee shall prevail over the domestic law in the following
case of a conflict between the
DOMESTIC LAW circumstances:
provisions of a treaty and the
provisions of the Code, the one a. when the General Anti Avoidance Rule is
that is later in point of time shall invoked or
prevail.
b. when Controlled Foreign Corporation provisions
are invoked or

c. when Branch Profits Tax is levied.

10. WEALTH TAX Presently it is levied It is proposed to levy it on net It is proposed that Wealth Tax will be levied broadly
on net wealth of an wealth of an Individual/HUF in on the same lines as provided in the Wealth Tax
Individual/HUF excess of Rupees fifty crores @ Act, 1957
beyond 15 lakhs @ 0.25% on All assets except
1% on specified exempted assets.
However, it will be payable by all taxpayers except
category of assets
non-profit organizations. The threshold limit and
rate of tax will be suitably calibrated in the context
of overall tax rates.

11. GENERAL ANTI- No such provisions The GAAR provisions apply The proposed GAAR provisions do not envisage
AVOIDANCE where a taxpayer has entered that every arrangement for tax mitigation would be
RULE (GAAR) into an arrangement, the main liable to be classified as an impermissible
purpose of which is to obtain a avoidance arrangement. It is only in a case where
tax benefit and such the arrangement, besides obtaining a tax benefit for
arrangement is entered or the assessee, is also covered by one of the four
carried on in a manner not conditions i.e. it is not at arms length or it
normally employed for bonafide represents misuse or abuse of the provisions of the
business purposes or are not at Code or it lacks commercial substance or it is
arm‟s length or abuses the entered or carried on in a manner not normally
provisions of the DTC or lacks employed for bona-fide business purposes, the
economic substance. GAAR provisions would come into effect.

The following safeguards are also proposed for


invoking GAAR provisions-
i) The Central Board of Direct Taxes will issue
guidelines to provide for the circumstances under
which GAAR may be invoked.

ii) GAAR provisions will be invoked only in respect


of an arrangement where tax avoidance is beyond
a specified threshold limit.

iii) The forum of Dispute Resolution Panel (DRP)


would be available where GAAR provisions are
invoked.

For further discussion or clarification in the matter contact

Mr. Chander Sawhney, Sr. Manager

Corporate Professionals,
D-28, South Ex-Part-1, New Delhi - 110 049, India,
(B): +91 11 40622200 | (D): +91 11 40622252 | (F): +91 11 40622201 | (M): +91 9810557353 | www.CorporateProfessionals.com

Disclaimer: This document is a copyright of Corporate Professionals (India) Pvt. Ltd. The entire contents of this document have been developed on the basis of relevant statutory provisions.
Though the author has made utmost efforts to provide authentic information however, the author and the company expressly disc laim all and any liability to any person who has read this
document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in relia nce upon the contents of this document.

Vous aimerez peut-être aussi