The document summarizes key aspects of the Direct Tax Code (DTC) 2010 introduced in India. Some key points: 1. The DTC 2010 aims to replace the existing Income Tax Act 1961 and simplify direct tax laws using simple language. It consolidates various direct tax laws into a single code. 2. Major changes include a single slab for all individuals (0-30% tax), corporate tax rate reduced to 30%, wealth tax rate cut to 0.25%, capital gains tax treated separately. 3. The DTC proposes the EET model for taxing investments and aims to promote long-term investments. Key dates for tax filing also changed to 30th June and 31st August.

1. THE DIRECT TAXES
CODE, 2010
Bill No. 110 of 2010
PRESENTED BY :-
SUPRIT SHARAN
ARPITA SINGH

3. A charge imposed by Government on
the annual gains
• of a person
• corporation
• or other taxable unit
The annual gain is derived from
• work, business pursuits
• investments, property dealings, and
• other sources determined in accordance with the
Internal Revenue Code or state law

4. THE DIRECT TAX CODE, 2010
When it is • in Lok Sabha on 30-08-2010
introduced? • By Finance minister P. Mukherjee
Enforced • Financial year 2012-2013
from • i.e. from 1st day of April, 2012
• to replace the existing Income Tax
It’s aim Act of 1961 in India.

5. WHY DTC IS REQUIRED???
Tax deduction limit Security
Rates of tax to be
on savings to be transaction tax to
uniform
hiked to Rs 3 lakh be abolished
To scrap long, Business losses can
short-term capital be carried forward
gains distinction indefinitely

6. No tax deduction on
Effective corporate tax
interest payable on any
rate at 30 %
Government security
Highest tax rate of 30% for
individual of income over
Rs 25 lakh

7. AND…
TO PROMOTE
THE
LONG-TERM
INVESTMENT

8. BASIS OF CHARGE
RESIDENTIAL
STATUS
TOTAL
INCOME

9. An individual shall be resident in India
in any financial year, if he is in India-
for a period, or for a period, or ii) three
periods, periods, hundred and
amounting in amounting in sixty-five days
all to one all to- or more within
hundred and the four years
eighty-two i)sixty days or immediately
days or more in more in that preceding that
that year; or year; and year.

10. The previous
provisions shall
not apply in
respect of an
individual who is
:-
a citizen of India and
who leaves India in
that year as a
member of the crew
of an Indian ship; or

11. the total income of any financial year of a
person, who is a resident, shall include all
income from whatever source derived which—
• accrues, or is deemed to accrue
to him in India
In India • is received, or is deemed to be
received, by him, or on his
behalf in India during the year
• accrues to him outside India
Outside • is received by him, or on his
behalf, outside India during the
India year.

12. For Non- Resident
Subject to the provisions of this Code, the total income of any
financial year of a person, who is a non-resident, shall include all
income from whatever source derived which—
accrues, or is deemed to accrue, to him in
India during the year; or
is received, or is deemed to be received, by
him, or on his behalf, in India during the year.

13. • `

14. CLASSIFICATION OF SOURCES OF
INCOME
Income from
Special sources
TOTAL
INCOME
Income from
Ordinary sources

15. Income from Special sources
Income from Special Sources
include interest, dividends on
which distribution tax has not
been paid, capital gains, any
other investment income,
royalty, fees for technical
services, amongst others.

17. Income from Ordinary sources
Income from
Income from Income from
House
employment Business
Property
Income from
Capital gains Residuary
Sources

18. Income from employment
Gross salary, including the value of perquisites and
profits in lieu of salary, to be taxed on due or
receipt basis, whichever is earlier and to be reduced
by permissible deductions
Permissible deductions to include professional tax,
transport allowance, prescribed special allowance,
compensation under voluntary retirement scheme,
gratuity, commutation of pension, amongst others

19. Income from House Property
Income from house property to be the gross rent less specified
deductions.
Gross rent to be higher of contractual rent or presumptive rent
calculated at 6% per annum of the rateable value fixed by the
local authority / 6% of cost of construction or acquisition of the
property (in the absence of rateable value).
Advance rent to be taxed in the financial year to which it relates
to.

20. Income from Business
All assets to be classified into business and
investment assets, wherein business assets to be
further classified into business trading assets and
business capital assets.
Only income from transactions in business assets to
form part of business income
Profit on sale of business capital assets, profit on sale
of an undertaking under a slump sale, transfer of any
self generated business asset, etc. to be treated as
business income

21. Capital gains
Income from transactions in all investment assets to be
taxed under the head “capital gains”.
Gains and losses to be included in the total income of the
financial year in which the investment asset is transferred
irrespective of the year of receipt of consideration, except
in the case of compulsory acquisition of an asset.

22. Income from Residuary Sources
Residuary income to comprise any income which does not
form part of any other head of income
The scope of gross residuary income widened to include
income having incidental nexus with some other head of
income
Any amount exceeding Rs. 20,000, taken or accepted or
repaid as loan or deposit otherwise than by account payee
cheque or draft to be taxed as income from residuary
sources.

23. TAX INCENTIVES
Major Deductions applicable under the Tax Incentives for an
individual are:
Investments through PFRDA approved agencies
Payment of tuition fees
Medical treatment
Health insurance
Donations
Interest on loan taken for higher education
Maintenance of a disabled dependant
Interest income on Government Bonds

24. The EET Model for Investments
Taxed
when it is
Exempted withdrawn
till it is
remained
Exempted invested
when
invested

25. EARLIER
EEE - MODEL
INVESTED
INVESTED
WITHDRAWN
Exempted Exempted Exempted

26. HIGHLIGHTS OF DTC
Single Code for direct taxes
Use of simple language
Flexibility
Providing stability
Reducing the scope for litigation

27. New Tax rates for individuals
Slab Income Between, Tax rate
1 0 - 1.60 Lakhs 0%
2 1.60 Lakhs to 10 Lakhs 10%
3 10 Lakhs to 25 Lakhs 20%
4 Above 25 Lakhs 30%

28. In the case of woman below the age of sixty
five years at any time during the
financial year:
Slab Income Between Tax rate
1 0 - 1.90 Lakhs 0%
2 1.90 Lakhs to 10 Lakhs 10%
3 10 Lakhs to 25 Lakhs 20%
4 Above 25 Lakhs 30%

29. In the case of senior citizens
Slab Income Between Tax rate
1 0 - 2.40 Lakhs 0%
2 2.40 Lakhs to 10 Lakhs 10%
3 10 Lakhs to 25 Lakhs 20%
4 Above 25 Lakhs 30%

30. New due dates for Tax Returns:
Sl. No Type Date First filing
(under DTC)
1 Non-Business / Non- 30th June 30/06/2013
Corporate
2 Others 31st August 31/08/2013

32. Income
Tax Act
DTC
Wealth
tax Act

33. Previous Assessment
Year Year
Financial
Year

34. Terminology of Assessed
• terminology of assessed was meant
for the person who is paying tax
Earlier and/or
• who is liable for proceeding under
the Act
• Two more definitions
• a person, whom the amount is
Now refundable, and/or,
• who voluntarily files tax return
irrespective of tax liability

35. Impact on Residential status
Ordinary
Resident
Resident
Not Ordinary
Earlier Resident
Non- Non-
Resident Resident

36. NOW
Non
Resident Resident of
India

37. Recent Tax Code v/s DTC
Sl. No. Before DTC After DTC
1 At present there are two legislation i.e. Income Single code for Income Tax Act and Wealth Tax Act.
Tax Act, 1961 and Wealth Tax Act, 1957. The code consists of 285 sections.
2 There are three kind of Residential status i.e Residential status of “Resident but not ordinarily
‘Resident’, ‘Non Resident’ and ‘Resident but resident” has been done away with.
not Ordinarily Resident’.
3 There are ‘previous year’ and ‘assessment To eliminate confusion only ‘Financial Year’ will
year’. prevail.
4 Date of filing of tax return 31st July for non- Date of filing of tax return preponed to 30th June
business non-corporate assessee and 30th Sept for non-business non-corporate assessee and 31st
for others. Aug for others
5 The corporate tax rate of domestic company is The corporate tax rate of all companies reduced to
30% and for foreign company, it is 40%. 30%. Business losses can be carry forward for
Business losses can be carry forward for 8 yrs. unlimited period. Dividend distribution tax
Dividend distribution is at 15%. remains at 15%.
6 Wealth tax rate is 1% above Rs.30 lacs. Wealth tax rate reduced to 0.25% above Rs.50
Definition of wealth includes some specific crore except for private discretionary trust, for
assets excluding investments in shares. It was which no threshold limit will be available.
applicable to all assessee. Definition of wealth has been expanded to include
all assets, including investments.

38. 7 Self-occupied house property whose gross rent Self-occupied house property whose gross
is taken as NIL, used to get deduction of rent is taken as NIL, will not get deduction of
interest on loan. Deduction for repair based on interest on loan. Deduction for repair on
annual value in case of rented house property annual value in case of rented house property
is 30%. is proposed to reduce to 20%.
8 As per section 80C certain investment/savings Exempt-Exempt-Taxation (EET) method of
upto Rs. 1 lac were deductible from taxable taxation of savings/investment, will be applied
income. on new contribution after commencement of
the code. Limit for investment raised to
Rs.300000 p.a. However deduction on
investment in tax-saving mutual funds and
fixed deposits have been abolished.
9 Income from Salary includes all perquisites All such exemption withdrawn.
such as house rent, leave travel assistance,
children education allowances, encashment of
unavailed earned leave on retirement, medical
reimbursement and free/concessional medical
treatment paid/provided etc is exempt up to a
certain limit.

39. Positives of DTC
Savings of up to '41,000 for those earning
'10 lakh
Corporate tax rate lowered from 40% to
30%
Foreign companies to pay tax at the same
rate as local companies
No tax on maturity amount of New
Pension Scheme at the time of withdrawal

40. Negatives of DTC
Women will not get any additional tax benefits
SEZ developers face tax burden starting April 2012
Fund houses face 5% tax on distribution income for
Ulips, equity-linked MFs
More non-profit firms will come under the tax net
As per the current laws, a NRI is liable to pay tax on
global income if he is in India for a period more than
60 days in a financial year

41. How insurance gets impacted:
Under DTC, to be eligible for tax
deduction, a policy should give life cover
of at least 20 times the annual premium
If this condition is not met, you will not get
any tax deduction on the premium and
even the income from the policy will be
taxable
Right now income received from insurance
policies is free.

42. Impact on Pension Funds:
Under the DTC, most of current tax saving investment will
not be eligible for deduction
An Annuity is an investment that gives out a regular income
of the investor.
DTC has proposed to make annuity income exempt from
taxation which makes them good tax saving instrument
The New Pension scheme is low cost pension fund which an
investor can consider.

43. EFFECT ON TAX LIABILITY DUE TO DTC
INCOME
RS
8,30,000
INCOME
RS
3,00,000
INCOME
RS 15,00,000

44. EFFECT ON TAX LIABILITY DUE TO DTC
SUPPOSE THE TAXABLE INCOME IS RS 3,00,000
FROM CURRENT TAX SLAB
TAX FOR 1ST RS 1,60,000 = NIL
TAX FOR NEXT1,40,000= RS 14,000 @ 10 %
TOTAL TAX LIABILITY (EXCLUDING EDUCATION
CESS @ 3% ) = RS 14,000

45. NOW, AFTER DTC
TAXABLE INCOME = RS 3,00,000
TAX FOR 1ST RS1,60,000 = NIL
TAX FOR NEXT RS 1,40,000 = RS 14,000@ 10%
TOTAL TAX LIABILITY (EXCLUDING EDUCATION CESS
@ 3%) = RS 14,000
TOTAL SAVING = RS ( 14,000 – 14,000)
= RS 0

46. SUPPOSE THE TAXABLE INCOME IS RS 8,30,000
FROM CURRENT TAX SLAB
TAX FOR 1ST RS 1,60,000 = NIL
TAX FOR NEXT3,40,000= RS 34,000 @ 10 %
TAX FOR NEXT 3,00,000 = RS 60,000 @ 20%
TAX FOR NEXT 30,000 = RS 9000@ 30%
TOTAL TAX LIABILITY (EXCLUDING EDUCATION CESS
@ 3% ) = RS(34000+ 60000+9000)
= RS 1,03,000

47. NOW, AFTER DTC
TAXABLE INCOME = RS 8,30,000
TAX FOR 1ST RS1,60,000 = NIL
TAX FOR NEXT RS 6,70,000 = RS 67000@ 10%
TOTAL TAX LIABILITY (EXCLUDING EDUCATION CESS
@ 3%) = RS 67,000
TOTAL SAVING = RS ( 1,03,000 – 67,000)
= RS 36000

48. SUPPOSE THE TAXABLE INCOME IS RS 10,00,000
FROM CURRENT TAX SLAB
TAX FOR 1ST RS 1,60,000 = NIL
TAX FOR NEXT3,40,000= RS 34,000 @ 10 %
TAX FOR NEXT 3,00,000 = RS 60,000 @ 20%
TAX FOR NEXT 2,00,000 = RS 60,000@ 30%
TOTAL TAX LIABILITY (EXCLUDING EDUCATION CESS
@ 3% ) = RS(34000+ 60000+60000)
= RS 1,54,000

49. NOW, AFTER DTC
TAXABLE INCOME = RS 10,00,000
TAX FOR 1ST RS1,60,000 = NIL
TAX FOR NEXT RS 8,40,000 = RS 84,000@ 10%
TOTAL TAX LIABILITY (EXCLUDING EDUCATION CESS
@ 3%) = RS 84,000
TOTAL SAVING = RS ( 1,54,000 – 84,000)
= RS 70,000

50. SUPPOSE THE TAXABLE INCOME IS RS 15,00,000
FROM CURRENT TAX SLAB
TAX FOR 1ST RS 1,60,000 = NIL
TAX FOR NEXT RS 3,40,000= RS 34,000 @ 10 %
TAX FOR NEXT RS 3,00,000 = RS 60,000 @ 20%
TAX FOR NEXT RS 7,00,000 = RS 2,10,000@ 30%
TOTAL TAX LIABILITY (EXCLUDING EDUCATION CESS
@ 3% ) = RS(34000+ 60000+210000)
= RS 3,04,000

51. NOW, AFTER DTC
TAXABLE INCOME = RS 15,00,000
TAX FOR 1ST RS1,60,000 = NIL
TAX FOR NEXT RS 8,40,000 = RS 84000@ 10%
TAX FOR NEXT RS 5,00,000 = RS 1,00,000
TOTAL TAX LIABILITY (EXCLUDING EDUCATION CESS
@ 3%) = RS (84000 + 1,00,000)
= RS 1,84,000
TOTAL SAVING = RS ( 3,04,000 – ,184,000)
= RS RS 1,20,000