TaxTMI 
TaxTMI 
TaxTMI 
INTRODUCTION:
The Direct Taxes Code Bill, 2010
The Direct Tax Code is expected to be introduced with effect from 1st April, 2010 since the draft code has been put open to the people for their comments. Comments were received from various corners on draft code. Accordingly the Government has issued revised draft code considering the comments of the public. The Government was also in the plea to introduced Direct Tax Code, replacing the existing Income Tax Act and Wealth Tax Act with effect from 1st April, 2010 and decided to table the same in the Parliament in the current sessions.
As planned the Direct Tax Code Bill has been introduced in the Lok Sabha on Monday, the 30th August, 2010. The present bill is bulkier than the present Income Tax Act, having 319 sections and twenty two schedules. The bill has 20 chapters divided into nine parts. Some of the features of the bill are as follows:
For individuals:
The income slab in the new bill for individuals is as follows:
INCOME SLAB | TAX RATE |
Up to Rs.2 lakh | NIL |
Rs. 2 lakh - 5 lakh | 10% on income exceeding 2 lakh |
Rs. 5 lakh - Rs. 10 lakh | Rs.30,000 + 20% on income exceeding Rs. 5 lakh |
Over Rs.10 lakh | Rs.1,30,000 + 30% on income exceeding Rs. 10 lakh |
According to the new bill the women could not enjoy the current special exemptions over and above what men get with effect from 1st April, 2012. Only senior citizens will get extra relief. The annual income of up to Rs.2.5 lakh is not to be paid tax.
The biggest beneficiaries of the DTC bill, as correctly said by Shri S.S. N. Moorthy, the CBDT Chairman, will be the lower and middle-middle class since the exemption limit is increased to Rs.2 lakh and the most of existing tax payers are in the income slabs up to Rs.5 lakh.
For Companies:
For Special Economic Zones:
International Taxation:
The original draft code proposed to take away the treaty override benefit. It also suggested that neither the treaty nor the code shall have preferential status. It was also proposed that provision of treaty or the code whichever is later in time, will prevail over the other.
Now the same has been changed. The new bill restored the position of allowing the treaty override - an assessee can choose between domestic law or treaty provisions, whichever is beneficial.
Long term capital gains:
The draft code seeks to exempt long term capital gains from the sale of shares through stock exchange. The present seeks to bring long term capital gains to tax under a graded system.
Securities transactions tax:
The Securities transactions tax will continue as per the new bill.
Wealth Tax:
It is proposed to levy a rate of one per cent for wealth exceeding Rs.1 crore.
Dividend Distribution Tax:
It is proposed to levy a rate of 5% by way of dividend distribution tax.
Others:
The new bill discusses with a number of subjects including income tax, dividend distribution tax, tax on distributed income, branch profit tax, wealth tax, prevention of abuse of the code, tax management, general provisions and interpretations of the code. The sections deal with many issues such as-
Conclusion:
The new bill appears more diluted than the draft bill. It will be expected that the bill is to go to Parliamentary Standing Committee for review. The delay in implementation of the bill is due to the rules are to be framed based on the new bill. The Department has to give training to be imparted on the income tax officials on both the income tax software and the law itself. Many a comment on the bill, new suggestions may come from various experts, stakeholders, professionals and it may be expected that the bill will still undergo changes till it becomes an Act.