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Direct Tax Code 2009 review
& Analysis
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DIRECT TAXES
y Direct tax in India
y Examples of Direct taxes
y Difference between Direct tax and Indirect tax
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DIRECT TAX CODE 2009
y Reduction in effective tax rates forIndividuals
y Tax incentives on Savings
y Reduction in Corporate Tax rate a positive;
yWithdrawal of tax incentives on Exports
y MAT provisions a key negative
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SECTORAL IMPACT
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AGRICULTURE
MEASURES
y Reduction in the Corporate Tax rate from 33% to25%.
y Introduction of long-term capital gain tax.y Decrease in the depreciation rate for Plant &
Machinery.
yAs per current regulations, SEZ profits are 100%
exempt for the first five years, then 50% for thenext 5 years,and again 50% for the next five years,subject to re-investment.
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AUTOMOBILE
MEASURES
y Significant changes in Personal Income Tax slabs.
y Cut in corporate tax rate to 25% (33% at present).
y The allowed rate of depreciation on Plant & Machinery hasalso been cut to 15%.
y Minimum Alternate Tax (MAT) will be 2% of the value ofgross assets (15% of Book Profit at present).
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BANKING
MEASURES
y Reduction in Corporate Tax rate to 25%.
y MAT at 0.25% of Gross Assets.
y Increase in Tax incentive limit on savings from Rs1 to3lakhs; taxation of such savings at the time of eventual
withdrawal.
y Withdrawal of a key incentive for Home Loans, viz. taxexemption on the Interest paid up to Rs1.5lakh.
y Provision for NPAs allowable up to 1% of aggregateaverage Advances as against 7.5% of Total Income and
10% of Rural Advances at present.
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CEMENT
MEASURES
Corporate tax rate reduced to 25% from 33% earlier.
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HOTEL
MEASURES
y Tax rate of companies (both domestic and foreign) tobe reduced to 25% from 33% earlier.
y Significant changes in Personal Income Tax slabs
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Pharmaceutical
MEASURES
y Basis for computing MAT changed from bookprofits to Gross assets.
y Corporate tax rate proposed to be reduced to 25%.
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Retail
y Tax rate of companies to be reduced to 25% from33%.
y Significant scale-up in the tax slabs for individuals.
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Software
MEASURES
y Basis for computing MAT changed from bookprofits to Gross assets.
y Corporate tax rate proposed to be reduced to 25%.
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Telecom
y Basis for computing MAT changed from bookprofits to Gross assets.
y Corporate tax rate proposed to be reduced to 25%.
Impact:
Negative for companies with a low tax rate andclaiming MAT credit
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