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    Direct Tax Code Bill-1

    Uploaded by

    Jerson_Pereira_3652
    The document summarizes key changes proposed in the Direct Tax Code Bill, which aims to replace the existing Income Tax Act of 1961. Some key points: - It proposes to lower the corporate tax rate to 30% for both domestic and foreign companies. Additionally, it introduces a 15% branch profit tax for foreign companies. - For individuals, it increases income tax slabs while removing some tax benefits for savings instruments and interest payments. - Other proposals include increasing the minimum alternate tax rate to 20% and introducing a 1% wealth tax on net wealth over Rs. 1 crore. It also doubles the royalty and FTS tax rate to 20%.

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    Direct Tax Code Bill-1

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    Jerson_Pereira_3652
    44 views31 pages
    The document summarizes key changes proposed in the Direct Tax Code Bill, which aims to replace the existing Income Tax Act of 1961. Some key points: - It proposes to lower the corporate tax rate to 30% for both domestic and foreign companies. Additionally, it introduces a 15% branch profit tax for foreign companies. - For individuals, it increases income tax slabs while removing some tax benefits for savings instruments and interest payments. - Other proposals include increasing the minimum alternate tax rate to 20% and introducing a 1% wealth tax on net wealth over Rs. 1 crore. It also doubles the royalty and FTS tax rate to 20%.

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    The document summarizes key changes proposed in the Direct Tax Code Bill, which aims to replace the existing Income Tax Act of 1961. Some key points: - It proposes to lower the corporate tax rate to 30% for both domestic and foreign companies. Additionally, it introduces a 15% branch profit tax for foreign companies. - For individuals, it increases income tax slabs while removing some tax benefits for savings instruments and interest payments. - Other proposals include increasing the minimum alternate tax rate to 20% and introducing a 1% wealth tax on net wealth over Rs. 1 crore. It also doubles the royalty and FTS tax rate to 20%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    44 views31 pages

    Direct Tax Code Bill-1

    Uploaded by

    Jerson_Pereira_3652
    The document summarizes key changes proposed in the Direct Tax Code Bill, which aims to replace the existing Income Tax Act of 1961. Some key points: - It proposes to lower the corporate tax rate to 30% for both domestic and foreign companies. Additionally, it introduces a 15% branch profit tax for foreign companies. - For individuals, it increases income tax slabs while removing some tax benefits for savings instruments and interest payments. - Other proposals include increasing the minimum alternate tax rate to 20% and introducing a 1% wealth tax on net wealth over Rs. 1 crore. It also doubles the royalty and FTS tax rate to 20%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 31

    Direct Tax Code Bill

    To Replace
    Income Tax Act 1961
    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 five


    heads:

    Income from house and property


    Income from business and profession
    Income from salaries
    Income in the form of Capital gains
    Income from other sources
    To be replaced by……
    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 be replaced by


    DTC.
    CORPORATE TAX PAYERS
    Corporate Tax Rate
    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.
    Provisions of DTC Bill

    • DTC proposes to levy tax on companies @ 30%

    • Same tax rates for Domestic as well as Foreign


    Companies.

    • No additional surcharge and cess


    Impact on Industry
    • Marginal relief for domestic companies

    • Welcome proposition for foreign companies

    • Additional “Branch Profit Tax” @ 15% for Indian


    branches of foreign companies
    Minimum Alternate Tax
    Existing Tax Provision
    • Payable @ 18% where income exceeds Rs 1 Cr.

    • Credit for tax paid under MAT is 10 years


    Provisions of DTC Bill
    • MAT Rate to be 20% where income exceeds Rs
    1 Cr.

    • Credit for tax paid under MAT is available for


    15 years
    Impact on Industry
    • Adverse effect on companies with less assets.
    Especially IT industry

    • Credit could be carried forward to 15 years.


    Wealth Tax
    Existing Tax Provision

    • Currently there is no Wealth Tax existing in


    India.
    Provisions of DTC Bill
    • The tax rate is 1% on net wealth over and
    above Rs1 Cr.
    Impact on Industry

    • All the companies with high net value of assets


    are going to be adversely affected.
    Royalty and Fees for Technical Services
    Existing Tax Provision

    • Currently Royalty and FTS are taxable @ 10%

    • This is calculated on gross income for foreign


    companies
    Provisions of DTC Bill

    • The Royalty and FTS rate is proposed to be


    raised to 20%
    Impact on Industry
    • Doubled the tax on Royalty and FTS

    • May have adverse effects on the import of


    technology to India.

    • Effects on foreign collaborations


    Branch Profits Tax
    Existing Tax Provision

    • At present there is no tax on remittance by


    branches to foreign head offices.
    Provisions of DTC Bill
    • BPT @ 15% is payable by a Private Equity of a
    foreign company.
    Impact on Industry
    • Increase in the overall tax liability of a foreign
    company

    • Effect on Foreign investors to India.


    HOUSEHOLD TAX PAYERS
    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%
    Above Rs 8,00,000 30%
    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%
    • 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 and Maintenance would be


    reduced from 30% to 20% of the Gross rent.
    Impact
    • More Savings because of increased Tax Slabs.

    • Adverse effects on Insurance Companies


    THANK YOU

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