DIRECT TAXES CODE 2009: AT A GALANCE

·        Tax law in simple and easy to understand language.

·        The new Income Taxes Code to be applicable from 1st April, 2011. 

·        Personal Income tax rates slashed substantially. 

Upto 10 lacs (less existing basic exemption limit) : 10%
Next 15 lacs : 20%
Over 25 lacs : 30% 

·        All Companies to pay tax @ 25%.

·        MAT @ 2% of gross assets. Even loss making companies to pay MAT.

·        No provision for MAT credit.

·        Dividend distribution tax to continue @ 15% of divided. Foreign companies also to pay 15% of branch profit tax. 

·        Firms to continue to pay tax @ 30%.

·        No cess or surcharge in any case.

·        Agricultural income continues to be included in taxable income only for rate purposes.

·        Wealth tax exemption limit raised to 50 crores. To include financial assets like shares.

·        Limit of savings increased from 1 lac to 3 lacs.

·        Savings to be taxed at the time of maturity under the EET system. Savings before 1-4-2011 not taxable.

·        Law made stricter for defaulters and non-filers.

·        The new law to apply in place of existing direct tax avoidance agreements with other countries. 

·        Losses allowed to be carried forward indefinitely. 

·        TDS to be deposited in the year of deduction. For last quarter, TDS can be deposited till due date of filing ITR. If TDS not deposited within 2 years from end of year of deduction, expenditure shall be disallowed.

·        TDS rates reduced in some cases like payment to contractors and rent of machinery to 1%. Due dates of filing income tax returns : 
                 Companies and other audit cases : Aug. 31
                 Others : June 30 

·        Revised return or belated return can be filed within 21 months from the end of the financial year.

·        Valuation of perquisites like rent-free accommodation to be same in case of all employees whether in government or private sector.

·        Gratuity to be exempt only if invested in a retirement fund.

·        No deduction of interest upto Rs. 1.50 lacs for self occupied properties. 

·        Standard deduction from Gross Income from house property reduced from 30% to 20%.

·        No distinction between short term and long term capital gains. All capital gains to be taxed at normal rates.

·        2000 to be base year for indexation in case of capital gains.

·        Security Transaction Tax to be abolished.

·        Exemptions u/s 54 etc. from capital gains abolished.

·        For business, profit linked incentives removed. Only revenue and capital expenditure shall be allowed to be amortised. The remaining    profit shall be taxable.

·   Area based incentives also removed. Existing business concerns not affected.