Topic: - Comparative study of DTC (Direct tax code) effective

from 1April 2012. 1. Introduction:Direct tax code is system which will replace the existing income tax regulation system in India. It consider only direct income such as personal income and wealth of the assess. Direct tax code is related to income tax so; first of all we need to know about the income tax regulation system (Income tax act 1961) which already exists in India.

1.1.

Income tax:-

A tax that is applicable on income that has been generated from any source is termed as Income tax. The central board of direct tax (CBDT) is the governing body that takes care of the Indian Income tax. Income tax is imposed by the government on an individual, company, business, Hindu undivided families (HUFs), co-operative organization and trusts. The tax structure is different on different commodities and products. Indian income tax is regularized under income tax act 1961.

1.2.

History of Income Tax:-

In India Income tax comes into existence in the year 1860. Initially at the time when it was imposed it had taken almost five years to regularize and implement the income tax however income tax act lapsed in the year 1865. Again after a gap of so many years it again comes into force. Act of 1886 was again came into force it defines the full fledged law of income tax it includes the exemption in various agricultural professions, income tax rules on industries and corporation. In the year Act VII of 1918 was launched that reforms the income tax law in a new way. This new act scrutinized the new industries that come under income tax bracket. This new act tries to expand the horizon to generate large revenue for the country. In the year 1922 another income tax act came into existence as a result of recommendation by the all India income tax committee. With this act a new clause was introduced under which unlike earlier where the collection of income tax in the current assessment year depends on the estimated collection of income tax of previous year. After the income tax act of 1922 there will be no

important provision came however the income tax later on comes under the provision of finance act. Every assessment year the new tax structure is decided by the finance department of the country that is released with the union budget. The income tax act of 1922 existed till 1961 however government had handed over the income tax clause to the law commission to review and recast it in a logical way so that the tax amended in an easier way without changing the basic tax structure. The income tax laws hold many industries and it has diversified clauses for different industries. There are various industries where government offers wavers in subsidies time to time. The present income tax act is same as of 1961 income tax act of India. As per the constitution of India every individual is bound to pay income tax for the progress of the nation. Any individual or an organization if earning any income in the country has to pay income tax. Although in the present day tax structure there is a different slab for man and women. As per Indian income tax law senior citizens are exempted from the regular income tax slab, similarly income generated through the agriculture is not subjected to the income tax. Any state that is affected by the natural calamity is also subjected to the income tax waver.

1.3. I. II.
III.

Source of Income: -

Income from Salary:- Under this head, Income received as salary under Employer-Employee relationship is taxed. Income from House Property:- In this head Income from house property is calculate by considering the Annual Value. Income from Business or profession:- Income arising from profits and gains of any Business or Profession; income derived by a Trade/ Professional/ similar Association by performing specific services for its members; any benefit from business whether convertible into money or not, incentives for exporters; any salary, interest, bonus, commission or remuneration received by Partner of a firm; any amount received under a Key man Insurance Policy which also covers Bonus; income from managing agency and speculative transactions; is taxable.

IV.

Income from Capital Gains:- Under section 2(14) of the I.T. Act, 1961, Capital asset is defined as property of any kind held by an assesses such as

real estate, equity shares, bonds, jewellery, paintings, art etc. but does not consist of items like stock-in-trade for businesses or for personal effects. Capital gains arise by transfer of such capital assets. V. Income from Other Sources:- There are some specific incomes which are to be taxed under this category such as income by way of dividends, horse races, winning of bull races, winning of lotteries, amount received from key man insurance policy. There are different provisions to pay income Tax and deduction the income tax in exist income tax act 1961. So as we can see the Indian Income Tax law is a subject which is filled with legal jargons and complexities that keep on changing every new financial year and the importance of this law in our routine life simply cannot be ignored. Whether it is filing of Income Returns on due dates or whether it's a financial investment decision to be taken, every where the Income Tax provisions play a major role in driving of the cost factor. The Direct Tax Code (or DTC) has recently been proposed by the Government of India, to bring about a change in the whole taxation system of the country. The new tax code aims to make the system more efficient and easy for tax payers, with simplified rules and regulations. It is a step towards replacing the four decade old Income Tax Act of India. The new DTC would impact both individuals as well as corporate with changes in taxation slabs, Public Provident Funds, insurance policies, home loans, mutual funds and shares.

2. Review of Literature
The cabinet approved a new direct tax code on Thursday that will replace archaic income and wealth tax laws in the country, a key reform initiative that is aimed at widening the tax net and increasing federal revenues. The direct tax code bill will now be placed before parliament for approval on Monday. The government aims to implement it from April 1, 2011. Here are some questions regarding the tax reform. 1. WHAT IS THE DIRECT TAX CODE ALL ABOUT? India wants to modernise its direct tax laws, mainly its income tax act which is now nearly 50 years old. The government, wants a modern tax code in step with the needs of an economy which is now the third largest in Asia. The new tax code is expected to widen the tax base, end unnecessary exemptions, moderate tax rates and add to the

government's coffers. The federal budget has estimated about $92 billion in direct tax receipts for the year that ends in March 2011. 2. WHY IS IT IMPORTANT FOR INDIAN FIRMS AND FOREIGN INVESTORS? One of the key aims of the new tax code is to provide a system which takes into account increased cross border mergers and acquisitions by Indian corporate over the last few years. The new code is also expected to streamline tax rates and administration for foreign institutional investors, for whom India is a top destination. Despite the crisis in the euro zone, capital flows have been robust this year with an inflow of $8.5 billion so far. 3. WILL IT PROVIDE GREATER STABILITY TO INVESTORS? The code aims to provide greater tax clarity and stability to investors who want to invest in Indian projects and companies.

These officials have said the government would not like to tinker with tax rates every year to provide a greater degree of tax certainty to corporate, investors and individuals. 4. WHAT WILL BE THE IMPACT ON INDIAN AND FOREIGN CORPORATES? On the face of it, the corporate tax rate has been reduced from a little over 33 percent to 30 percent. But tax experts say whether a company pays more tax or less will also depend on a key provision called the minimum alternate tax (MAT). MAT is applicable to those companies who do not show book profits liable to tax, as they claim a plethora of exemptions on account of being in capital intensive industries. The MAT rate has now been increased from 18 to 20 percent in the new code. Foreign corporate today pay a higher rate of tax. However, the new rate of taxation for foreign corporate is not yet known. 5. WILL IT BE REVENUE POSITIVE FOR THE GOVERNMENT? The government has marginally lowered the tax burden for individuals and has effectively left corporate with largely similar tax rates as before, hoping that these changes will make the new code revenue positive. Though the exact impact is not yet known, finance ministry officials have said the new code will help shore up the tax GDP ratio significantly from around the current 11 percent level. 6. WILL THE ANNUAL BUDGET BE LESS IMPORTANT? An important part of the budget every year has been the detailing of the tax rates. However, with the introduction of the new direct tax code, the tax rates will not be part of the budget presented to Parliament every year. (Reporting by Abhijit Neogy ; editing by Alistair Scrutton and Surojit Gupta) NEW
DELHI | Fri Aug 27, 2010 4:30pm IST http://in.reuters.com/article/2010/08/27/idINIndia51111220100827

3. Need of the study:There is every one who gets the income pay the some part of their income as a tax to the government to improve or development of the country in India. So they have many problems to pay or calculation to taxation. While any change come in to any policy or structure of income tax than he has the problem to calculate deduction amount. There is a difference in income tax structure due to the gender, age, Income variation and source of Income. In India is a land of farmers special tax wavers has given for the agriculture, there is an income tax exemption on agricultural income. The government of India keeps on revising the income tax rates after a span of time. The revision of income tax takes place at the time of union budget declaration. The income tax rates in India are constant all over the country. My study will give help to understand to difference between traditions or exist income regulation and new Income tax code system. These are some other beneficial point which will be by my study:To know difference between Income tax act 1961 and Income Tax code system. To help the people to calculate of Income tax. To know profits and losses of new Income tax code system towards the people. To know the awareness and behaviour of people towards the new Direct tax code system.

4. Objective of study:Main objective of my study will be Comparison between the old tax regulation and new Direct tax code system. Impact of new Direct tax code system. Know awareness and attitude of people towards the new Direct tax code system. How the help will to the people by the new Direct tax code system.

5. Research methodology:-

6. Conclusion:-

7. Limitation:-

8. References:-