DIRECT TAXES CODE 2009 : AT A GALANCE
DIRECT TAXES CODE 2009 : AT A GALANCECA - CA. Naresh Jakhotia
- Tax law in simple and easy to understand language.
- The new Income Taxes Code to be applicable from 1st April, 2011.
- Personal Income tax rates slashed substantially. o Upto 10 lacs (less existing basic exemption limit) : 10% o Next 15 lacs : 20% o Over 25 lacs : 30%
- All Companies to pay tax @ 25%.
- MAT @ 2% of gross assets. Even loss making companies to pay MAT.
- No provision for MAT credit.
- Dividend distribution tax to continue @ 15% of divided.
- Foreign companies also to pay 15% of branch profit tax.
- Firms to continue to pay tax @ 30%.
- No cess or surcharge in any case.
- Agricultural income continues to be included in taxable income only for rate purposes.
- Wealth tax exemption limit raised to 50 crores. To include financial assets like shares.
- Limit of savings increased from 1 lac to 3 lacs.
- Savings to be taxed at the time of maturity under the EET system. Savings before 1-4-2011 not taxable.
- Law made stricter for defaulters and non-filers.
- The new law to apply in place of existing direct tax avoidance agreements with other countries.
- Losses allowed to be carried forward indefinitely.
- TDS to be deposited in the year of deduction. For last quarter, TDS can be deposited till due date of filing ITR. If TDS not deposited within 2 years from end of year of deduction, Expenditure shall be disallowed.
- TDS rates reduced in some cases like payment to contractors and rent of machinery to 1%.
- Due dates of filing income tax returns :o Companies and other audit cases : Aug. 31o Others : June 30
- Revised return or belated return can be filed within 21 months from the end of the financial year.
- Valuation of perquisites like rent free accommodation to be same in case of all employees whether in government or private sector.
- Gratuity to be exempt only if invested in a retirement fund.
- No deduction of interest upto Rs. 1.50 lacs for self occupied properties.
- Standard deduction from Gross Income from house property reduced from 30% to 20%.
- No distinction between short term and long term capital gains. All capital gains to be taxed at normal rates.
- 2000 to be base year for indexation in case of capital gains.
- Security Transaction Tax to be abolished.
- Exemptions u/s 54 etc. from capital gains abolished.
- For business, profit linked incentives removed. Only revenue and capital expenditure shall be allowed to be amortised. The remaining profit shall be taxable.
- Area based incentives also removed. Existing business concerns not affected.
- Limit of turnover for presumptive taxation raised to 1 cr.
- Sources of income will have folowing names. A. Income from employmentB.Income from house propertyC. Income from businessD. Capital gainsE. Income from residuary sources.
- Key proposals for businesses:- Taxation of all non profit organisations rationalized- Profits of non-life insurance biz to be disclosed annually- Govt. may enter overseas agreements for double taxation avoidance- No tax deduction on interest payable to banking cos, insurers
- Tax law in simple and easy to understand language.
- The new Income Taxes Code to be applicable from 1st April, 2011.
- Personal Income tax rates slashed substantially. o Upto 10 lacs (less existing basic exemption limit) : 10% o Next 15 lacs : 20% o Over 25 lacs : 30%
- All Companies to pay tax @ 25%.
- MAT @ 2% of gross assets. Even loss making companies to pay MAT.
- No provision for MAT credit.
- Dividend distribution tax to continue @ 15% of divided.
- Foreign companies also to pay 15% of branch profit tax.
- Firms to continue to pay tax @ 30%.
- No cess or surcharge in any case.
- Agricultural income continues to be included in taxable income only for rate purposes.
- Wealth tax exemption limit raised to 50 crores. To include financial assets like shares.
- Limit of savings increased from 1 lac to 3 lacs.
- Savings to be taxed at the time of maturity under the EET system. Savings before 1-4-2011 not taxable.
- Law made stricter for defaulters and non-filers.
- The new law to apply in place of existing direct tax avoidance agreements with other countries.
- Losses allowed to be carried forward indefinitely.
- TDS to be deposited in the year of deduction. For last quarter, TDS can be deposited till due date of filing ITR. If TDS not deposited within 2 years from end of year of deduction, Expenditure shall be disallowed.
- TDS rates reduced in some cases like payment to contractors and rent of machinery to 1%.
- Due dates of filing income tax returns :o Companies and other audit cases : Aug. 31o Others : June 30
- Revised return or belated return can be filed within 21 months from the end of the financial year.
- Valuation of perquisites like rent free accommodation to be same in case of all employees whether in government or private sector.
- Gratuity to be exempt only if invested in a retirement fund.
- No deduction of interest upto Rs. 1.50 lacs for self occupied properties.
- Standard deduction from Gross Income from house property reduced from 30% to 20%.
- No distinction between short term and long term capital gains. All capital gains to be taxed at normal rates.
- 2000 to be base year for indexation in case of capital gains.
- Security Transaction Tax to be abolished.
- Exemptions u/s 54 etc. from capital gains abolished.
- For business, profit linked incentives removed. Only revenue and capital expenditure shall be allowed to be amortised. The remaining profit shall be taxable.
- Area based incentives also removed. Existing business concerns not affected.
- Limit of turnover for presumptive taxation raised to 1 cr.
- Sources of income will have folowing names. A. Income from employmentB.Income from house propertyC. Income from businessD. Capital gainsE. Income from residuary sources.
- Key proposals for businesses:- Taxation of all non profit organisations rationalized- Profits of non-life insurance biz to be disclosed annually- Govt. may enter overseas agreements for double taxation avoidance- No tax deduction on interest payable to banking cos, insurers
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