THE DTC BILL

IN TWO MINUTES
GENERAL

The Direct Taxes Code, 2010 will come
into effect from financial year 2012-13

Residential status of companies will be
based on place of effective
management. Accordingly, if a foreign
company has its place of “effective
management” in India, it will be
treated as a resident in India and would
be liable to tax on its worldwide
income

The exempt-exempt-exempt (EEE)
method of taxation retained

TAX RATES

Corporate tax rate retained at 30% (no
additional cess and surcharge notified)

MAT (Minimum Alternate Tax)
increased to 20%. This represents an
increase from current 18% base rate

DDT (Dividend Distribution Tax)
retained at 15%

Introduction of Branch Profits Tax at
15%

Tweak in slabs for individual tax rates
– results in tax saving of Rs 28,620 for
income of `10,00,000.

Wealth Tax — 1% of the amount by
which net wealth exceeds `1 crore

INDIVIDUAL TAXATION

Individual slab rates (in `)
Up to 2,00,000 Nil
2,00,001 - 5,00,000 10%
5,00,000 - 10,00,000 20%
10,00,001 and above 30%

In case of senior citizens the slab
would begin from an income of
`2,50,000

Exempt Exempt Exempt (EEE) method
of taxation for :

Provident fund under Provident
Funds Act, 1975

Any other provident fund set up by
the Centre and notified in this
behalf

Approved Superannuation Fund

Approved Pension Fund

Medical reimbursement exemption
limit increased from `15,000 to
`50,000

INCOME FROM
HOUSE PROPERTY

No deemed let out of house property
— income from house property to be
computed only if the property is let
out.

Income from letting out of house
property even if in the nature of
trade, commerce or business will be
taxable, as Income from House
Property (certain exceptions
provided)

Interest deduction up to `1,50,000 on
loan against self-occupied house
property retained

CAPITAL GAINS

Securities Transaction Tax (STT) to
continue

No capital gains tax on transfer of
equity share of a company or unit of
equity-oriented fund held for more
than one year if STT is paid on the
transfer

Fair market value of the asset as on
April 1, 2000, to be considered as cost
at the option of the taxpayer for
computing tax gains

It has been specifically provided that
income of foreign institutional
investors would be taxed as capital
gains

Capital gains tax payable only to
the extent of 50% of the gains on
sale of equity share of a company or
unit of equity oriented fund held up
to one year, if STT is paid on the
transfer

In case cost of acquisition of asset
cannot be determined or
ascertained, it is to be treated as nil

COMPILED BY KPMG