Direct Tax Code Bill-1

8/8/2019 Direct Tax Code Bill-1

1/31

Direct Tax Code Bill

To ReplaceIncome Tax Act 1961


2/31

Income Tax Act 1961

The major tax enactment in India.

Imposes a tax on income of individuals and corporations.

This Act imposes a tax on income under the following fiveheads:

Income from house and property

Income from business and profession

Income from salaries

Income in the form of Capital gains

Income from other sources


3/31

To be replaced by


4/31

Direct Tax Code

Released for public debate in August 2009

To replace the nearly 50-year-old income tax law

Applicable since April 2012.

Objectives:

To make the law simple and tax-payer friendly

Bringing in major policy changes

Income Tax, TDS, DDT, FBT are abolished and to bereplaced by DTC.


5/31

CORPORATE TAX PAYERS


6/31

Corporate Tax Rate


7/31

Existing Tax Provision

Domestic Companies taxable @ 33.22% where

the income exceeds Rs 1 Cr.

Foreign companies taxable @ 42.23% where

the income exceeds Rs 1 Cr.


8/31

Provisions ofDTC Bill

DTC proposes to levy tax on companies @ 30%

Same tax rates for Domestic as well as Foreign

Companies.

No additional surcharge and cess


9/31

Impact on Industry

Marginal relief for domestic companies

Welcome proposition for foreign companies

Additional Branch Profit Tax @ 15% for Indian

branches of foreign companies


10/31

Minimum Alternate Tax


11/31

Payable @ 18% where income exceeds Rs 1 Cr.

Credit for tax paid underMAT is 10 years



12/31

MAT Rate to be 20% where income exceeds Rs

1 Cr.

Credit for tax paid underMAT is available for

15 years



13/31

Impact on Industry

Adverse effect on companies with less assets.

Especially IT industry

Credit could be carried forward to 15 years.


14/31

Wealth Tax


15/31

Currently there is no Wealth Tax existing in

India.



16/31

The tax rate is 1% on net wealth over and

above Rs1 Cr.



17/31

Impact on Industry

All the companies with high net value of assets

are going to be adversely affected.


18/31

Royalty and Fees for TechnicalServices


19/31

Currently Royalty and FTS are taxable @ 10%

This is calculated on gross income for foreign

companies



20/31

The Royalty and FTS rate is proposed to be

raised to 20%



21/31

Impact on Industry

Doubled the tax on Royalty and FTS

May have adverse effects on the import oftechnology to India.

Effects on foreign collaborations


22/31

BranchP

rofits Tax


23/31

At present there is no tax on remittance bybranches to foreign head offices.



24/31

BPT @ 15% is payable by a Private Equity of a

foreign company.



25/31

Impact on Industry

Increase in the overall tax liability of a foreign

company

Effect on Foreign investors to India.


26/31

HOUSEHOLD

TAXP

AYERS


27/31

Existing Tax Slabs

Income Range Tax Rate

Less than Rs 1,60,000 Nil

Rs 1,60,001 Rs 3,00,000 10%

Rs 3,00,001 Rs 5,00,000 10%

Rs 5,00,001 Rs 8,00,000 20%

Abov

eR

s 8,00,000 30%


28/31

DTC Tax Slabs

Income Range Tax Rate

Less than Rs 1,60,000 Nil

Rs 1,60,001 Rs10,00,000 10%

Rs10,00,001 Rs 25,00,000 20%

Above Rs 25,00,000 30%


29/31

ELSS, Term deposits, NSC and House loan

principal repayment will looseTax benefits.

No tax deductionallowed on interest payable to

banking firms and insurers policies.

Deductions for Rent andMaintenance would be

reduced from 30% to 20% of the Gross rent.


30/31

Impact

More Savings because of increased Tax Slabs.

Adverse effects on Insurance Companies


31/31

THANK YOU

Direct Tax Code Bill-1

Documents

Transcript of Direct Tax Code Bill-1