direct tax code 2009 review & analysis

8/8/2019 Direct Tax Code 2009 Review & Analysis

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Direct Tax Code 2009 review

& Analysis


2/14

DIRECT TAXES

y Direct tax in India

y Examples of Direct taxes

y Difference between Direct tax and Indirect tax


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4/14

DIRECT TAX CODE 2009

y Reduction in effective tax rates forIndividuals

y Tax incentives on Savings

y Reduction in Corporate Tax rate a positive;

yWithdrawal of tax incentives on Exports

y MAT provisions a key negative


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SECTORAL IMPACT


6/14

AGRICULTURE

MEASURES

y Reduction in the Corporate Tax rate from 33% to25%.

y Introduction of long-term capital gain tax.y Decrease in the depreciation rate for Plant &

Machinery.

yAs per current regulations, SEZ profits are 100%

exempt for the first five years, then 50% for thenext 5 years,and again 50% for the next five years,subject to re-investment.


7/14

AUTOMOBILE

MEASURES

y Significant changes in Personal Income Tax slabs.

y Cut in corporate tax rate to 25% (33% at present).

y The allowed rate of depreciation on Plant & Machinery hasalso been cut to 15%.

y Minimum Alternate Tax (MAT) will be 2% of the value ofgross assets (15% of Book Profit at present).


8/14

BANKING

MEASURES

y Reduction in Corporate Tax rate to 25%.

y MAT at 0.25% of Gross Assets.

y Increase in Tax incentive limit on savings from Rs1 to3lakhs; taxation of such savings at the time of eventual

withdrawal.

y Withdrawal of a key incentive for Home Loans, viz. taxexemption on the Interest paid up to Rs1.5lakh.

y Provision for NPAs allowable up to 1% of aggregateaverage Advances as against 7.5% of Total Income and

10% of Rural Advances at present.


9/14

CEMENT

MEASURES

Corporate tax rate reduced to 25% from 33% earlier.


10/14

HOTEL

MEASURES

y Tax rate of companies (both domestic and foreign) tobe reduced to 25% from 33% earlier.

y Significant changes in Personal Income Tax slabs


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Pharmaceutical

MEASURES

y Basis for computing MAT changed from bookprofits to Gross assets.

y Corporate tax rate proposed to be reduced to 25%.


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Retail

y Tax rate of companies to be reduced to 25% from33%.

y Significant scale-up in the tax slabs for individuals.


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Software

MEASURES




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Telecom



Impact:

Negative for companies with a low tax rate andclaiming MAT credit

direct tax code 2009 review & analysis

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