direct tax code & its impact on indian(1)(1)

7/31/2019 Direct Tax Code & Its Impact on Indian(1)(1)

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7/23/12

DIRECT TAX CODE &

ITS IMPACT ON INDIAN

ECONOMY


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GROUP MEMBERSNILAM SINGH

NITISH KEDIA

VIJAYA

VIJIT VENUGOPAL


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Direct tax

code

The finance minister hasreleased a new draft direct

tax code, which is adocument containingchanges in exemptions taxslab. This will be a big

change to four decades oldincome tax act.


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Men and women are treated same now.

Surcharge and education cess areabolished.

Tax exemption on LTA (leave travelallowance) is abolished.


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Tax exemption on Education loan tocontinue.

Corporate tax reduced from 34% to 30%including education cess and surcharge.

Taxation of Capital gains from propertysale.


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Tax on dividends.

Bad news for NRIs.

Exemption will remain same as 1.5 lacsper year for interest on housing loanfor self-occupied property.

Only half of Short-term capital gains will betaxed.


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What is the importance of Direct TaxCode?

Under DTC-II, the proposal is to tax allcompanies including the foreign companies @

30% - No surcharge no education cess.

Offers big saving to Tax payers.

Medical re-imbursement.


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Comparison between ITA & DTC :

Income Tax Act Direct TaxCode

EEE whereinvestment,interest& thematurity amountremains tax free.

Men & Women weretreated differently.

EET is a tax systemwhere aninvestment in asavings plan isdeductible fromincome.

Men & Women aretreated equally.


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Income Tax Act Direct Tax

Code

Surcharge &Education Cess werecharged.

LTA (Leave TravelAllowance) is

exempted.

Surcharge &Education Cess are

abolished.

LTA exemption isabolished.


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Income Tax

Act

Direct Tax Code

Men(Rs)

Women (Rs)

SeniorCitizen(Rs)

Rate%

Up to1.6lakh

Up to1.9lakh

Up to2.4lakh

0

1.6-5lakh

1.9-5lakh

2.4-5lakh

10

5-8lakh

5-8lakh

5-8lakh

20

Above8 lakh

Above8 lakh

Above8 lakh

30

Annual Income(Rs)

Rate %

Up to 2 lakh

(Senior Citizens2.5 lakh)

0

2-5 lakh 10

5-10 lakh 20

Above 10 lakh 30


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Current - Salary incomeRs 15 lakh

Current exemptionRs 1.2 lakh

Taxable SalaryRs 13.8 lakh

ANNUAL INCOME SLABS TAX

MEN(Rs.)

LAKH

WOMEN(Rs.)

LAKH

SENIORCITIZEN

(Rs.)LAKH

RATE%

MEN(Rs.)

WOMEN(Rs.)

SENIORCITIZEN

(Rs.)

0-1.6 0-

1.9

0-

2.40

0% 0 0 0

1.6-5 1.9-5 2.4-5 10%34,000

31,000

26,000

5-8 5-8 5-8 20%

60,000

60,000

60,000

P DT S l i


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Propose DT - Salary incomeRs 15 lakh

DTC exemption

Rs 1.5 lakh Taxable salaryRs 13.5 lakh

ANNUAL INCOMESLABS

TAX

MEN &

WOMEN(Rs)LAKH

SENIOR

CITIZEN(Rs)LAKH

RATE MEN (Rs) WOMEN

(Rs)

SENIOR

CITIZEN(Rs)

0-2 0-2.5 0% 0 0 0

2-5 2-5 10% 30,000 30,000 25,000

5-10 5-10 20% 1

lakh

1

lakh

1

lakh


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Impact on Indian

EconomyPositive implications :

Investors with long term gains better.

Senior citizen will acquire good relief.

Investors get dual benefit.


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Other implications:

Rs 60,000 or Rs 40,000 can be claimed in respectof treatment of diseases that are uncommon likeHIV, etc.

Lesser options available for investments in taxsaving schemes.

Great disappointment for risk savvy investors ofELSS who seek to combine, market investmentswith tax saving.

ULIPs and ELSS are no longer attractive options.


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Conclusion:

The proposed Direct

Tax Code is acombination of majortax relief and removalof most tax-exemptedbenefits.

The Tax Code raisedincome tax slabssignificantly, lowering

the tax burden on


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THANKYOU!

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