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    21.6 D D T (DDT: लाभाश वतरण कर) : Mrunal's Economy Pillar#2A: Budget → Revenue Part → Tax-Receipts → Page 119

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    Washim Alam50C
    The document discusses various concepts related to direct taxes in India, including: 1) Dividend Distribution Tax (DDT) is levied on shareholder dividend income at a rate of 15-20%, which companies pay on behalf of shareholders. 2) Capital Gains Tax (CGT) is paid on profits from selling capital assets like property, with tax rates depending on how long the asset was held. 3) Income tax rates for individuals range from 0-30% depending on taxable income slabs. Various deductions and exemptions are available.

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    21.6 D D T (DDT: लाभाश वतरण कर) : Mrunal's Economy Pillar#2A: Budget → Revenue Part → Tax-Receipts → Page 119

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    Washim Alam50C
    21 views3 pages
    The document discusses various concepts related to direct taxes in India, including: 1) Dividend Distribution Tax (DDT) is levied on shareholder dividend income at a rate of 15-20%, which companies pay on behalf of shareholders. 2) Capital Gains Tax (CGT) is paid on profits from selling capital assets like property, with tax rates depending on how long the asset was held. 3) Income tax rates for individuals range from 0-30% depending on taxable income slabs. Various deductions and exemptions are available.

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    The document discusses various concepts related to direct taxes in India, including: 1) Dividend Distribution Tax (DDT) is levied on shareholder dividend income at a rate of 15-20%, which companies pay on behalf of shareholders. 2) Capital Gains Tax (CGT) is paid on profits from selling capital assets like property, with tax rates depending on how long the asset was held. 3) Income tax rates for individuals range from 0-30% depending on taxable income slabs. Various deductions and exemptions are available.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    21 views3 pages

    21.6 D D T (DDT: लाभाश वतरण कर) : Mrunal's Economy Pillar#2A: Budget → Revenue Part → Tax-Receipts → Page 119

    Uploaded by

    Washim Alam50C
    The document discusses various concepts related to direct taxes in India, including: 1) Dividend Distribution Tax (DDT) is levied on shareholder dividend income at a rate of 15-20%, which companies pay on behalf of shareholders. 2) Capital Gains Tax (CGT) is paid on profits from selling capital assets like property, with tax rates depending on how long the asset was held. 3) Income tax rates for individuals range from 0-30% depending on taxable income slabs. Various deductions and exemptions are available.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

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    21.6 DIVIDEND DISTRIBUTION TAX (DDT: लाभाश वतरण कर)


    - Since 1997, Levied on a shareholder’s dividend income. In reality, company (=source)
    will cut that much ₹ ₹ portion from shareholders’ dividend, & directly deposit that ₹ ₹
    portion to the government, as DDT.
    - DDT Rate: 15% + cess + surcharge.
    - Budget-2018: If equity-Mutual Fund then also 10% + surcharge + cess.
    - Previously, big industrialists would form ‘not-for-profit trust’ and transfer their
    dividend from company to the trust so to avoid tax liabilities but Budget-2017 tweaked
    the norms to fix this loophole. (How exactly, is not important).
    - Full-Budget-2019: Companies operating from GIFT-city-IFSC given some exemptions
    from DDT.

    21.7 CAPITAL GAINS TAX (CGT: पजीगत


    ू लाभ कर)
    - When an owner makes profit by selling his capital assets such as non-agro-land,
    property, jewellery, paintings, vehicles, machinery, patents, trademarks, shares,
    bonds & other securities- then he has to pay CGT.
    - CGT is subdivided into _ _ _ _ _ _ _ capital gains tax (LCGT: 20% द घाव ) and _ _ _ _
    capital gains tax (SCGT:15% अ पाव ) depending on how long did the owner keep that
    asset before selling it.
    - Before-Budget-2018: Listed companies Shares, Mutual Funds Units etc. were exempt
    from LCGT. But, since large amount of money is invested here and owners make good
    profits by selling them so government decided to apply the Long Term Capital Gains
    Tax system on them as well, but @10%.
    - In practice, the buyer will deduct that much ₹ ₹ portion from the payment to seller,
    and deposit to the government. However, some people form shell companies abroad &
    do transactions from there to avoid paying taxes to India.
    - Related Topics: DTAA, GAAR, Round Tripping, Angel Tax etc- in black money handout.
    - Interim-Budget-2019:
    - IF person sells his house on profit, then he has to pay CGST. However, if he uses
    the profit to invest in two more residential houses in India, then no need to pay
    CGST. He can use this scheme only once in his lifetime. (Before Budget-2019, it
    was for only 1 new residential house.)
    - Income Tax computation on the notional rental income from 2nd house also
    tweaked but we’re not here for CA exam.
    - If Startup entrepreneurs unable to secure capital from investors → they sometimes
    have to sell their house arrange money for starting business. So, Government had
    exempted their house-selling-profit from CGT till 31/3/2019. Full-Budget-2019
    extended it till 31/3/2021.
    - Full-Budget-2019: Companies operating from GIFT-city-IFSC given some exemptions
    from CGT.

    ❓MCQ-Prelims-2012: In which of the following circumstances may ‘capital gains


    arise?
    1. When there is an increase in the sales of a product.
    2. When there is a natural increase in the value of the property owned.
    3. When you purchase a painting and there is a growth in its value due to increase in
    its popularity.
    Answer Codes: (a) 1 only (b) 2 and 3 only (c) 2 only (d) 1, 2 and 3

    Mrunal’s Economy Pillar#2A: Budget → Revenue Part → Tax-Receipts → Page 119


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    21.8 INCOME TAX ON INDIVIDUALS (आयकर) FROM 1860


    - James Wilson (financial member of the Council of India, founder of the Economist
    magazine and Standard Chartered Bank) introduced income tax in India on 24 July 1860
    to compensate the British losses during 1857’s Sepoy mutiny (also known as India’s first
    war of independence against British Rule). Therefore, 24th July is celebrated as Income
    Tax Day (Aaykar Diwas).
    Suppose the gross income of an Indian Resident (age less than 60) is ₹9 lakhs.
    - Out of this gross income, first we have to subtract the tax-deductions and tax-
    exemptions like income from agriculture, investments made in Provident Fund, NPS,
    LIC, Medical Insurance etc (upto a certain limit), house rent allowance (HRA),
    repayment of home/education loan, money donated in eligible charitable funds and so
    forth.
    - Full-Budget-2019: additional tax deduction given
    - if took loans to buy electric vehicle
    - if a taking home loan for the first time. Amount, deadline etc NOT HERE FOR
    CA EXAM
    - Afterward subtracting such things, suppose taxable Income is: ₹5,50,000/-
    - From this amount, Salaried individuals get standard deduction of ₹50000. (Previously,
    it was ₹40,000 but Interim-Budget-2019 raised it to 50k). So, ₹5,50,000 - 50000 = ₹5
    lakh is the taxable income, THEN…
    Total Taxable Income: ₹5 lakh Income Tax Amount

    Out of that upto 2.5 lakhs 0% 0%

    From 2,50,001 to 5 lakhs = ₹2.5 5% of 2.5 lakhs* ____


    lakhs left

    From 5,00,001 to 10 lakhs = ₹5 20% of of that 5 lakhs N/A


    lakhs

    From 10,00,001 & above 30% of that amount N/A

    Total Income Tax ₹12,500

    Minus Tax Rebate of ₹12,500 (if taxable income is upto -(MINUS) ₹12,500
    ₹5l)**

    _
    Total Income Tax to be paid

    Surcharge (अ धभार): 10%-37% surcharge on Tax amount, IF 0% of 0% = 0


    taxable-income is above ₹50 lakhs

    Cess (उपकर): 4% Health and education cess on (Tax + 4% x (0+0) = 0


    Surcharge). (Before Budget-2018, there was only 3%
    Education Cess).

    Total payment to IT Dept: Income Tax + Surcharge + Cess _


    - **Previously, rebate was ₹2500 if taxable income upto ₹3.5 lakhs but Interim-Budget-
    2019 raised it to keep middle-class voters happy before General Elections.

    Mrunal’s Economy Pillar#2A: Budget → Revenue Part → Tax-Receipts → Page 120


    https://telegram.me/pdf4exams https://telegram.me/testseries4exams

    - Full-Budget-2019: no changes in the income tax %rates or slabs, but Nirmala S.


    justified that ‘rich people need to contribute more for national development, so I’m
    raising the surcharges on them.’
    Surcharge if taxable income is Before Full-Budget-2019 After full-Budget-2019
    More than ₹50 lakh upto 1 cr. 10% Unchanged
    More than ₹1 cr upto 2 cr. 15% Unchanged
    More than ₹ 2 cr upto 5 cr. 15% 25%
    More than ₹5 cr 15% 37%

    21.8.1 Income Tax Slabs


    - Before Budget-2017: there were three tax slabs in income tax: 10%, 20%, 30%;
    - After Budget-2017: 5%, 20%, 30%.
    - Income tax slabs for senior citizens are slightly relaxed. i.e.
    - Age 60+ but less than 80 Years: upto 3l(0%), 3-5l(5%)...remaining slabs same
    as young.
    - Age 80+ years: upto 5l(0%)...remaining slabs are same as young.

    21.9 DIRECT TAXES: MISC. CONCEPTS

    21.9.1 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _(HUF) ( द ू अ वभा जत प रवार):


    - A Hindu, Buddhists, Jains, or Sikhs family members can come together, pool their
    assets and form an HUF under the Income Tax Act.
    - HUF is taxed separately from its members, & helps saving taxes due to certain
    provisions/loopholes of Income Tax Act. How exactly? Ans. not here for CA exam.

    21.9.2 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ( क पत कराधान)
    - Salaried employees can easily compute their taxable income from their annual salary,
    & pay income tax.
    - Companies hire full time Chartered Accountants to prepare their balance sheets,
    compute incomes, expenses and pay Corporation tax.
    - But self-employed freelance consultants / professionals such as lawyers, doctors,
    fashion designers etc. face difficulty in keeping such account books. So, for them
    Income Tax Act has Presumptive Taxation System ( क प करा ान णाल ) i.e. their
    ‘income/profit’ is computed as “x%” of their gross receipts, and on that amount
    they’ve to pay income tax (depending on slab 5%, 20%, 30%) + applicable cess and
    surcharges.
    - To encourage less-cash-economy, Budget-2017 had given benefits in this presumptive
    taxation calculation formula, If the entrepreneur received payments in cashless format
    -NEFT, RTGS, Cheque, Card etc.

    21.9.3 _ _ _ _ _ _ _ _ _ _ _ ? (अ म कर)
    - New financial year starts from 1st April 2019 and ends on 31st March 2020.
    - If everyone paid all of their direct taxes at 11:59PM on 31st March 2020, then govt. will
    face money-shortage for the whole year till 31st March midnight comes.

    Mrunal’s Economy Pillar#2A: Budget → Revenue Part → Tax-Receipts → Page 121

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