1.

 DTC removes most of the categories of exempted income. Unit Linked Insurance Plans (ULIPs),
Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Long term infrastructures
bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property will
loose tax benefits.
2. Tax saving based investment limit remains 100,000 but another 50,000 has been added just
for pure life insurance (Sum insured is atleast 20 times the premium paid) , health insurance, mediclaims policies
and tuition fees of children. But the one lakh investment can now only be done in provident fund, superannuation
fund, gratuity fund and new pension fund.
3. The tax rates and slabs have been modified. The proposed rates and slabs are as follows:
Annual Income Tax Slab
Up-to INR  200,000 (for senior citizens 250,000) Nil
Between INR 200,000 to 500,000 10%
Between INR 500,000 to 1,000,000 20%
Above INR 1,000,000 30%

Men and women are treated same now 

4. Exemption will remain same as 1.5 lakhs per year for interest on housing loan for self-occupied property.
5. Only half of Short-term capital gains will be taxed. e.g. if you gains 50,000, add 25,000 to your taxable income.
Long term capital gains (From equities and equity mutual funds, on which STT has been paid) are still exempted
from income tax.
6. As per changes on 15th June, 2010, Tax exemption at all three stages (EEE) —savings, accretions and
withdrawals—to be allowed for provident funds (GPF, EPF and PPF), NPS (new pension scheme administered by
PFRDA), Retirement benefits (gratuity, leave encashment, etc), pure life insurance products & annuity schemes.
Earlier DTC wanted to tax withdrawals.

7. Surcharge and education cess are abolished.

8.  For incomes arising of House Property: Deductions for Rent and Maintenance would be reduced from 30% to
20% of the Gross Rent. Also all interest paid on house loan for a rented house is deductible from rent.9. Tax
exemption on LTA (leave travel allowance) is abolished.
10. Tax exemption on Education loan to continue.

11. Corporate tax reduced from 34% to 30% including education cess and surcharge.

12. Taxation of Capital gains from property sale : For sale within one year, gain is to be added to taxable salary.
For long term gain (after one year of purchase), instead of flat rate of 20% of gain after indexation benefit, new
concept has been introduced. Now gain after indexation will be added to taxable income and taxed at per the tax
slab.
Base date for cost of acquisition has been changed to 1st April, 2000 instead of earlier 1st April, 1981.
14. Medical reimbursement : Max limit for medical reimbursements has been increased to 50,000 per year from
current 15,000 limit.
Note from Author :
I maintain my website, write articles and reply comments because of my interest/hobby to share information and
knowledge.

Read more: http://www.pankajbatra.com/india/new-direct-tax-code-dtc-highlights/#ixzz10dIMJqtV
More NRIs may fall under the tax net if the Direct Taxes Code (DTC) Bill proposal to
impose a levy on their global income if they stay in India for more than 60 days in a
year is approved by Parliament.
     
As per the existing Income Tax laws, an NRI is liable to pay tax on global income if
he is in India in that year for a period or periods amounting to 182 days.
     
Furthermore, in case an NRI resides in India for a period of 365 days or more over a
period of four years prior to the assessment year, he is also liable to pay tax on his
global income.
     
The new DTC Bill has proposed to make an NRI liable to pay tax on global income is
he resides in India in a particular year for a period or periods amounting to 60 days,
down from the existing provision of 182 days in the existing

Read more at: http://www.ndtv.com/article/india/direct-tax-code-bill-may-bring-bad-

news-for-nris-49730?cp
In addition, the DTC has also removed the 'Resident Not Ordinarily Resident
(RNOR)' category to simplify the tax laws, the official said.
     
Now, there will be only two categories, 'Resident' and 'Non-Resident', the official
added

Read more at: http://www.ndtv.com/article/india/direct-tax-code-bill-may-bring-bad-

news-for-nris-49730?cp
Experts feel that the DTC proposal could be a damper for NRIs visiting India to
meet their relatives or for business promotion. 

NEW DELHI: The Cabinet on Thursday approved the draft of the Direct Tax
Code (DTC) Bill, but the changes in tax slabs proposed in the latest version
are a pale shadow of the sweeping changes promised in the original proposal
unveiled in August last year by finance minister Pranab Mukherjee. 

The version approved by the Cabinet exempts incomes up to Rs 2 lakh per

annum (against the current Rs 1.6 lakh) from tax, proposes to tax incomes
between Rs 2 lakh and Rs 5 lakh at 10%, between Rs 5 lakh and Rs 10 lakh
at 20% and beyond Rs 10 lakh at 30%. 

For women and senior citizens, the exemption limit would be Rs 2.5 lakh per
annum. At present, women have to pay tax on incomes of Rs 1.9 lakh per
annum or more and senior citizens on incomes of Rs 2.4 lakh or more. 

The maximum that anyone can gain from this proposal in terms of savings on
the tax burden compared to the present levels is Rs 26,000 per annum. Even
that is only possible if you are a woman and have an annual income of Rs 10
lakh or more. That's a far cry from the Rs 2.2 lakh that the same person would
have saved if the original DTC proposal had been accepted by the Cabinet. 

For corporates, too, the DTC appears to have flattered only to deceive. The
code passed by the Cabinet has maintained the rate of tax on corporate
incomes at the current 30%, against the 25% proposed originally, and the
minimum alternate tax (MAT) for corporates at 20% of book profits. 

The original draft had promised a whole new paradigm in direct taxation,
drastically lowering the tax burden while also doing away with most
exemptions. A revised draft released in June this year brought back some of
the exemptions like the one available for interest on housing loans that the
first draft had proposed to get rid of. 

The speculation that this might force the finance ministry to make the revision
of tax slabs also less ambitious to avoid giving away too much revenue has
now proved well-founded. Under the original proposal, the 10% slab would
have extended up to Rs 10 lakh and the 20% slab up to Rs 25 lakh, meaning
that the 30% rate would have applied only to incomes of over Rs 25 lakh per
annum. 

What has finally emerged unless the rates or slabs are changed once again in
the process of being discussed in the Parliamentary standing committee or in
Parliament hardly justifies the hype that greeted the DTC when it was
announced last year. It is the sort of tinkering at the margins that routinely
happens in the annual Budget, instead of being the biggest tax revolution
since Independence. 

On the plus side for individual taxpayers, withdrawal from provident funds will
not be taxed as the original DTC had proposed to do. Also deductions from
taxable income will be available for interest on housing loans up to Rs 1.5 lakh
per annum and on payments into PF and similar superannuation schemes up
to Rs 1 lakh. Also available will be a deduction of up to Rs 50,000 for life
insurance and health insurance premiums or tuition fees

DTC's impact on India Inc

Sarath Chelluri / Mumbai September 2, 2010, 0:39 IST

Although below expectations, experts see proposals as largely positive.

Monday’s announcement of the new Direct Taxes Code (DTC) proposals is among the two far-reaching reforms that
will help India sustain high growth rates. For the capital markets, the Bill is positive, says Rakesh Arora, associate
director, Macquarie Research. “Lower tax liability for companies at about 10 per cent and no changes in capital gains
tax for foreign institutional investors (FIIs) are beneficial for the capital markets and ensure greater investor interest.”

 Click here to visit SME

Buzz 

  Also Read
News
  Related Stories
Now

- CM wants incentives to SEZ to

continue
- Kanika Datta: Second-hand
self-esteem
- DTC Bill scraps leave travel
allowance from tax exemption
list
- DTC to raise income tax base:
Revenue Secy
- DTC proposal for MAT will kill
SEZs: CommMin
- DTC bill to impact employment,
investment in SEZs: EPCES
On the flip side, the increase in MAT (minimum alternate tax) rate will translate into a higher tax outgo, even as the
period for carry forward excess MAT amount over actual tax is extended from 10 years to 15 years. We spoke to
experts and analysts to figure out the implications of the changes in corporate tax and MAT on companies and
sectors.

While these proposals will take effect from April 2012, read on to know what the initial estimates indicate in terms of
impact on listed players:

MAT effect
The first draft of DTC proposed MAT to be levied at two per cent on gross assets. Uday Ved, head of tax, KPMG,
suggests the move to increase MAT by 200 basis points from 18 per cent to 20 per cent (on book profit) is less
severe. After the proposed removal of surcharge and cess, effective rate remains almost unchanged. Nevertheless,
quite a few companies could be impacted, including telecom, oil & gas and FMCG, as well as exporters.
The impact of MAT would also be negative for companies that have asset-owned business models, like road project
companies. Most companies have special purpose vehicles (SPVs) and typically hold assets in the form of build-
operate-transfer (BOT) and other projects.

Real estate companies, especially the ones in the commercial space, would also be impacted. Companies that have
higher exposure that have higher exposure to SEZs (special economic zones), would be impacted as these are
exempt currently. However, units in SEZs that commence operations on or before March 31, 2014 are to be entitled
to profit-linked tax deductions.

On the face of it, increase in MAT rates is negative for IT (information technology) companies, which currently have
significantly lower tax outgo. TCS, Wipro and HCL Technologies are among the major companies that are likely to
see an increase in tax outgo. However, some clarity is needed on whether MAT would be applicable on STPI
(Software Technology Parks of India) for 2012. Experts suggest mid-cap IT companies would be impacted more,
compared to larger ones.

The same is true for pharma companies. Sarabjit Kour Nangra, vice-president (research), Angel Securities, says:
“Mid-cap companies in the pharma space falling in the MAT bracket will be more affected compared to larger peers”.
Pharma companies that initially moved to SEZs to claim tax benefits would now attract MAT and this will be across
the spectrum.

FMCG companies like Britannia and Colgate (which draws around 70 per cent of its output from tax-free zones) could
see their tax outflows increase. Shirish Pardeshi, analyst, Anand Rathi Securities, says: “Initial estimates suggest
FMCG companies operating in tax-free zones could see their effective tax rate increase by about 200-300 basis
points on an average”.

Lower corporate tax a positive

Unlike MAT recommendations, which are better than in the original draft, corporate tax payers will be disappointed.
Corporate tax rate has been proposed at 30 per cent instead of the earlier expected rate of 25 per cent; nevertheless
it’s still lower than the highest rate of 33.6 per cent. Thus, lowering of rates would lead to better corporate profitability.
Companies would take heart from the fact that tax rates would not carry any additional surcharge and cess.

Sandeep Gupta, analyst, Edelweiss Securities, points out: “Lowering of the corporate tax rate will lead to significant
reversal of deferral tax liabilities/assets, which will impact 2010-11 profitability. With reduction in the statutory rate by
3.22 percentage points, there will be significant write backs/offs of deferred tax liabilities/assets, carried in the
balance sheet.” Companies like Gujarat NRE Coke, Hindustan would stand to benefit on this count, he adds.

Key segments that will gain from the reduction in corporate tax include infrastructure construction companies like
Lanco Infratech, BGR Energy, HCC and IVRCL Infra, which currently pay tax at 32-33 per cent.

State-owned banks like SBI and PNB also stand to gain. Likewise, many MNCs, too, are expected to gain as they
typically pay higher tax rates, Siemens being a case in point.

"Broadly, the DTC proposals should lead to productive use of capital in the long-run. But, there could be a slowdown
in investments by corporates in the near term (till clarity emerges on medium term availability of
exemptions/incentives - especially as the MAT rate is sought to be hiked) and hence could impact GDP growth to an
extent," Says Deepak Jasani, Head of Retail Research, HDFC Securities