{"id":247,"date":"2009-08-15T22:30:30","date_gmt":"2009-08-15T17:00:30","guid":{"rendered":""},"modified":"2009-08-15T22:30:30","modified_gmt":"2009-08-15T17:00:30","slug":"Highlights-of-the-draft-new-direct-tax-code","status":"publish","type":"post","link":"http:\/\/www.raagvamdatt.com\/Highlights-of-the-draft-new-direct-tax-code\/","title":{"rendered":"Highlights of the draft \u201cNew Direct Tax Code\u201d"},"content":{"rendered":"<p>The draft \u201cNew Direct Tax Code\u201d has been unveiled. And there are lots of proposals that should make you happy if implemented.<\/p>\n<p>Here are the salient features of the draft New Direct Tax Code.<br \/>\n<!--more--><\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<table>\n<tr><!-- Row 1 --><\/p>\n<td>\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"pub-8580636079496870\";\n\/* 250_250_In_Article *\/\ngoogle_ad_slot = \"4765524919\";\ngoogle_ad_width = 250;\ngoogle_ad_height = 250;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<p><!-- Col 1 --><\/p>\n<td>\n<p>People had very high expectations from Budget 2009. However, it was a dampener, with very little change in direct taxes \u2013 including personal income tax.<\/p>\n<p \/>\n<p>(Check out \u201c<a href=\"http:\/\/raagvamdatt.com\/Budget-2009-2010-personal-income-tax-IT-related-changes-and-impact-on-you\/237\/\"><b><u>Budget 2009-2010: Personal income tax (IT) related changes and impact on you<\/u><\/b><\/a>\u201d for more)<\/p>\n<\/td>\n<p><!-- Col 2 --><br \/>\n  <\/tr>\n<\/table>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p>Although there weren\u2019t many changes in the budget, the finance minister, Mr. Pranab Mukherjee, promised to release a draft of a new direct tax code within 45 days of the budget.<\/p>\n<p \/>\n<p>This draft has been released now.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"pub-8580636079496870\";\n\/\/ArticleLinkList\ngoogle_ad_slot = \"0928256543\";\ngoogle_ad_width = 468;\ngoogle_ad_height = 15;\n\/\/--><\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>What is the \u201cNew Direct Tax Code\u201d?<\/b><\/p>\n<p \/>\n<p>Income tax in India is governed by the age-old Income Tax Act, drafted in 1961.<\/p>\n<p \/>\n<p>A lot of things have changed since then.<\/p>\n<p \/>\n<p>No doubt, many things have been implemented by modifying the IT Act from time to time. But this has been a patch-work.<\/p>\n<p \/>\n<p>And like any patch work, it has made the IT Act very complicated. Thus, the IT Act today is very difficult to interpret, and has resulted in many disputes and court cases.<\/p>\n<p \/>\n<p>The \u201cNew Direct Tax Code\u201d is something that would ultimately replace the Income Tax Act, 1961. It would contain provisions of income tax as well as some other direct taxes, like the wealth tax.<\/p>\n<p \/>\n<p>So, here are the changes proposed in the \u201cNew Direct Tax Code\u201d.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Change in Income Tax Slabs<\/b><\/p>\n<p \/>\n<p>This is the highlight of the draft of the New Direct Tax Code. It proposes to change the income tax slabs dramatically.<\/p>\n<p \/>\n<p>(Check out \u201c<a href=\"http:\/\/raagvamdatt.com\/Latest-income-tax-IT-slabs-brackets-and-rates\/206\/\"><b><u>Income Tax (IT) Slabs \/ Brackets and rates<\/u><\/b><\/a>\u201d for the current tax slabs)<\/p>\n<p \/>\n<p>The draft proposes the following slabs:<\/p>\n<p \/>\n<table border=\"1\"  width=\"100%\">\n<tr><!-- Row 1 --><\/p>\n<td><b>Income<\/b><\/td>\n<p><!-- Col 1 --><\/p>\n<td><b>Rate<\/b><\/td>\n<p><!-- Col 2 --><br \/>\n  <\/tr>\n<tr><!-- Row 2 --><\/p>\n<td>From Rs. 0 to Rs. 1.6 Lakhs<\/td>\n<p><!-- Col 1 --><\/p>\n<td>0%<\/td>\n<p><!-- Col 2 --><br \/>\n  <\/tr>\n<tr><!-- Row 3 --><\/p>\n<td>From Rs. 1.6 Lakhs to Rs. 10 Lakhs<\/td>\n<p><!-- Col 1 --><\/p>\n<td>10%<\/td>\n<p><!-- Col 2 --><br \/>\n  <\/tr>\n<tr><!-- Row 4 --><\/p>\n<td>From Rs. 10 Lakhs to Rs. 25 Lakhs<\/td>\n<p><!-- Col 1 --><\/p>\n<td>20%<\/td>\n<p><!-- Col 2 --><br \/>\n  <\/tr>\n<tr><!-- Row 5 --><\/p>\n<td>Over Rs. 25 Lakhs<\/td>\n<p><!-- Col 1 --><\/p>\n<td>30%<\/td>\n<p><!-- Col 2 --><br \/>\n  <\/tr>\n<\/table>\n<p \/>\n<p>Sounds great, doesn\u2019t it?<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"pub-8580636079496870\";\n\/\/ArticleLinkList\ngoogle_ad_slot = \"0928256543\";\ngoogle_ad_width = 468;\ngoogle_ad_height = 15;\n\/\/--><\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Inclusion of perquisites (or perks) in salary<\/b><\/p>\n<p \/>\n<p>The draft recommends that the perks given out to employees by their employers should be included in their salaries.<\/p>\n<p \/>\n<p>This would increase taxable income of many people.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Abolishment of Securities Transaction Tax (STT)<\/b><\/p>\n<p \/>\n<p>The draft proposes removal of the Securities Transaction Tax (STT) that is currently levied on transactions in equities. Instead of the STT, the long term capital gain tax would be reinstated.<\/p>\n<p \/>\n<p>This is great for traders, but not so good for long term investors.<\/p>\n<p \/>\n<p>(Here is a thorough analysis of this: \u201c<a href=\"http:\/\/raagvamdatt.com\/Securities-transaction-tax-STT-not-removed-in-budget-2009-good-or-bad-for-you\/246\/\"><b><u>Securities Transaction Tax (STT) not removed in budget 2009 \u2013 Good or bad for you?<\/u><\/b><\/a>\u201d)<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Increase in exemption limit for investments<\/b><\/p>\n<p \/>\n<p>Currently, investments upto Rs. 1 Lakh per year in certain instruments are exempt from income tax under section 80C.<\/p>\n<p \/>\n<p>(Check out \u201c<a href=\"http:\/\/raagvamdatt.com\/Saving-Income-Tax-Understanding-Section-80C-Deductions\/123\/\"><b><u>Saving Income Tax \u2013 Understanding Section 80C Deductions<\/u><\/b><\/a>\u201d for all the details about section 80C)<\/p>\n<p \/>\n<p>The draft proposes to increase this limit to Rs. 3 Lakhs per year.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"pub-8580636079496870\";\n\/\/ArticleLinkList\ngoogle_ad_slot = \"0928256543\";\ngoogle_ad_width = 468;\ngoogle_ad_height = 15;\n\/\/--><\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Move to Exempt \u2013 Exempt \u2013 Taxed (EET) regime<\/b><\/p>\n<p \/>\n<p>The draft proposes a move to the EET regime of taxation.<\/p>\n<p \/>\n<p>(Please read \u201c<a href=\"http:\/\/raagvamdatt.com\/Taxation-regimes-EEE-EET-ETE-TEE-what-do-these-mean\/235\/\"><b><u>Taxation Regimes &#8211; EEE EET ETE TEE \u2013 What do these mean<\/u><\/b><\/a>\u201d to understand the different taxation regimes)<\/p>\n<p \/>\n<p>This would impact popular investment avenues like PPF, EFP and GPF. However, please do not panic \u2013 even if this proposal is accepted, <b><i>your investments upto the time this change happens would remain tax free at the time of withdrawal<\/i><\/b>.<\/p>\n<p \/>\n<p>(Please read \u201c<a href=\"http:\/\/raagvamdatt.com\/Public-Provident-Fund-PPF-Plan-Your-Retirement-and-Save-Tax\/125\/\"><b><u>Public Provident Fund (PPF) \u2013 Plan Your Retirement and Save Tax<\/u><\/b><\/a>\u201d and \u201c<a href=\"http:\/\/raagvamdatt.com\/Provident-Fund-PF-and-Voluntary-Provident-Fund-VPF\/136\/\"><b><u>Provident Fund (PF) and Voluntary Provident Fund (VPF)<\/u><\/b><\/a>\u201d for more about these investment avenues)<\/p>\n<p \/>\n<p>If this proposal is adopted, it would also bring the New Pension System (NPS) on par with other long term investments meant for retirement.<\/p>\n<p \/>\n<p>(Check out \u201c<a href=\"http:\/\/raagvamdatt.com\/Highlights-of-the-New-Pension-System-Scheme-NPS-for-non-government-employees\/218\/\"><b><u>Highlights of the New Pension System \/ Scheme (NPS)<\/u><\/b><\/a>\u201d for comprehensive details on the NPS)<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Manifold increase in the threshold for Wealth Tax<\/b><\/p>\n<p \/>\n<p>The draft recommends that the threshold for levying the wealth tax be increased from Rs. 30 Lakhs to Rs. 50 Crores.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Change in the rate of Wealth Tax<\/b><\/p>\n<p \/>\n<p>Currently, wealth tax is levied at the rate of 1% of the wealth. The draft proposes to change this to 0.25%.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>Benefits of the New Direct Tax Code<\/b><\/p>\n<p \/>\n<p>Well, from the above, you can see that there can be tremendous savings for you in terms of a reduced income tax liability if this new code is made into a law.<\/p>\n<p \/>\n<p>You would also benefit from the changes related to the wealth tax.<\/p>\n<p \/>\n<p>But apart from monitory benefits, this code also aims at simplifying the laws, smoothening the entire process of tax collection, and better overall compliance. In short, it aims at making the tax system more efficient.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p><b>When is this expected to be implemented?<\/b><\/p>\n<p \/>\n<p>Well, this is difficult, and depends largely on the debate that happen inside the parliament (by lawmakers) and outside it (by tax experts and income tax department).<\/p>\n<p \/>\n<p>However, realistically speaking, the New Direct Tax Code can be expected to be adopted into a law and implemented sometime in the year 2011.<\/p>\n<p \/>\n<table width=\"100%\" border=\"0\" cellpadding=\"2\" cellspacing=\"2\">\n<tr  >\n<td>\n<\/td>\n<td>\n<\/td>\n<\/tr>\n<\/table>\n<p \/>\n<p>Other articles you might be interested in:<\/p>\n<p \/>\n<ul>\n<li><a href=\"http:\/\/raagvamdatt.com\/Securities-transaction-tax-STT-not-removed-in-budget-2009-good-or-bad-for-you\/246\/\"><u>Securities Transaction Tax (STT) not removed in budget 2009 \u2013 Good or bad for you?<\/u><\/a><\/li>\n<li><a href=\"http:\/\/raagvamdatt.com\/Cant-find-an-ATM-withdraw-cash-from-a-POS-terminal-using-your-debit-card\/245\/\"><u>Can\u2019t find an ATM? 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And there are lots of proposals that should make you happy if implemented. Here are the salient features of the draft New Direct Tax Code.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"_links":{"self":[{"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/posts\/247"}],"collection":[{"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/comments?post=247"}],"version-history":[{"count":0,"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/posts\/247\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/media?parent=247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/categories?post=247"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.raagvamdatt.com\/wp-json\/wp\/v2\/tags?post=247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}