Fire your tax related queries and i would get it solved!!!

[TFL]

GUYS....

GET READY TO ROCK !!!

HEARD THAT THE NEW INCOME TAX CODE HAS BEEN UNVEILED......

God knows what new dumb provisions would be incorporated....

Would let you all know as soon as i have the copy of the code....

But its only effective after 2 years, right?
Thank your continued co-operation with our dump questions.

Best wishes,

 

[diosys]

But its only effective after 2 years, right?
Thank your continued co-operation with our dump questions.

Best wishes,

No...it would apply from FY 2010-2011....not far away !!!

as far as i have read with respect to income tax rates...It is a bonanza for each honest tax payer...

basic tax slab at 10% for income between 1,60,000 to 10,00,000 !!!

 

[magnet]

Sorry diosys sir..but i m posting the stuff before u put it

Really nice code it is...

I guess now people will be more happy to pay tax when this comes into effect

The government on Wednesday initiated radical tax reforms through a draft code that aims at moderating income tax rates, abolishing Securities Transaction Tax and increasing deduction for savings up to Rs 3 lakh (Rs 300,000).

Releasing the Direct Taxes Code that will ultimately replace the over four-decades old Income Tax Act and bring all other direct taxes like wealth tax under its purview, on Wednesday said if reasonable level of discussion happens on the code, a bill could be placed in the Winter Session of Parliament.

The code proposes to exempt the general tax payer from paying income tax if his income is Rs 1,60,000 in a year.

He would pay just zero tax till an income of Rs 1,60,000 per year. From income above Rs 1,60,000 till Rs 10 lakh (Rs 1 million), he will pay a tax of 10 per cent.

For income above Rs 10,00,000, but less than Rs 25,00,000 (Rs 2.5 million), he will pay tax of Rs 84,000 plus 20 per cent of the amount over Rs 10,00,000.

For income above Rs 25,00,000, he will pay Rs 3,84,000 plus 30 per cent of the amount by which the total income exceeds Rs 25,00,000.

Currently, the general income tax payer does not pay tax till Rs 1,60,000 of income in a year. However, he pays 10 per cent tax on income between Rs 1,60,000 and Rs 3 lakh, 20 per cent between Rs 3 lakh and Rs 5 lakh (Rs 500,000) and 30 per cent beyond Rs 5 lakh.

We expect to have better compliance and better collection of taxes," Mukherjee said.

While the code proposes abolition of the controversial STT, it also suggests reintroduction of tax on long term capital gains on securities trading.

Home Minister P Chidambaram [ Images ], who during his tenure in the finance ministry had initiated work on the Code, said that this was a brand new Code written from scratch.

Key proposals for investors:

* Rates of tax to be uniform
* Tax deduction limit on savings to be hiked to Rs 3 lakh (Rs 300,000)
* Income tax slabs proposed to be changed; highest tax rate of 30% for individuals to be applicable for income over Rs 25 lakh (Rs 2.5 million)
* Security transaction tax to be abolished
* Effective corporate tax rate at 25 %
* To scrap long, short-term capital gains distinction
* Business losses can be carried forward indefinitely
* No tax deduction on interest payable on any govt security
* Base year for calculation of cap gains tax moved to April 2000
* Wealth tax liability to be discharged by payment of pre-paid taxes
* Income from certain transfers not be treated as capital gains

Proposals for businesses:

* Taxation of all non profit organisations rationalised
* Profits of non-life insurance business to be disclosed annually
* Govt may enter overseas agreements for double taxation avoidance
* No tax deduction on interest payable to banking cos, insurers

The new code seeks to consolidate and amend the law relating to all direct taxes, that is, income-tax, dividend distribution tax, fringe benefit tax and wealth-tax so as to establish an economically efficient, effective and equitable direct tax system which will facilitate voluntary compliance and help increase the tax-GDP ratio. Another objective is to reduce the scope for disputes and minimize litigation.

Briefly, the salient features of the code are as under:

(a) Single Code for direct taxes: All the direct taxes have been brought under a single code and compliance procedures unified. This will eventually pave the way for a single unified taxpayer reporting system.

(b) Use of simple language: With the expansion of the economy, the number of taxpayers can be expected to increase significantly. The bulk of these taxpayers will be small paying moderate amounts of tax. Therefore, it is necessary to keep the cost of compliance low by facilitating voluntary compliance by them.

This is sought to be achieved, inter alia, by using simple language in drafting so as to convey, with clarity, the intent, scope and amplitude of the provision of law. Each sub-section is a short sentence intended to convey only one point. All directions and mandates, to the extent possible, have been conveyed in active voice.

Similarly, the provisos and explanations have been eliminated since they are incomprehensible to non-experts. The various conditions embedded in a provision have also been nested. More importantly, keeping in view the fact that a tax law is essentially a commercial law, extensive use of formulae and tables has been made.

(c) Reducing the scope for litigation: Wherever possible, an attempt has been made to avoid ambiguity in the provisions that invariably give rise to rival interpretations. The objective is that the tax administrator and the tax payer are ad idem on the provisions of the law and the assessment results in a finality to the tax liability of the tax payer. To further this objective, power has also been delegated to the Central Government/Board to avoid protracted litigation on procedural issues.

(d) Flexibility: The structure of the statute has been developed in a manner which is capable of accommodating the changes in the structure of a growing economy without resorting to frequent amendments. Therefore, to the extent possible, the essential and general principles have been reflected in the statute and the matters of detail are contained in the rules/Schedules.

(e) To ensure that the law can be reflected in a Form: For most taxpayers, particularly the small and marginal category, the tax law is what is reflected in the Form. Therefore, the A-10 structure of the tax law has been designed so that it is capable of being logically reproduced in a Form.

(f) Consolidation of provisions: In order to enable a better understanding of tax legislation, provisions relating to definitions, incentives, procedure and rates of taxes have been consolidated. Further, the various provisions have also been rearranged to make it consistent with the general scheme of the Act.

(g) Elimination of regulatory functions: Traditionally, the taxing statute has also been used as a regulatory tool. However, with regulatory authorities being established in various sectors of the economy, the regulatory function of the taxing statute has been withdrawn. This has significantly contributed to the simplification exercise.

(h) Providing stability: At present, the rates of taxes are stipulated in the Finance Act of the relevant year. Therefore, there is a certain degree of uncertainty and instability in the prevailing rates of taxes. Under the code, all rates of taxes are proposed to be prescribed in the First to the Fourth Schedule to the code itself thereby obviating the need for an annual Finance Bill. The changes in the rates, if any, will be done through appropriate amendments to the Schedule brought before Parliament in the form of an Amendment Bill.

New tax code: Pay 10% tax on Rs 10-lakh salary: Rediff Business News, Latest India business news, India Economy news, World Business, Finance news, Latest business headlines, business videos and business articles.

 

[hrishig]

Hi,

What are the things which will not be considered in this case ( & they are presently considered)


1) 1.5 lkh deduction for home loan
2) no benefit after 1st house
3) all LIC policy Maturity amount will be taxable (not sure 100%of this )

what else?

 

[diosys]

Hi,

What are the things which will not be considered in this case ( & they are presently considered)


1) 1.5 lkh deduction for home loan
2) no benefit after 1st house
3) all LIC policy Maturity amount will be taxable (not sure 100%of this )

what else?

Dear....

it has been 5 hour since the code has been released...plus this is a draft....expect many changes in it...

Further the deduction for interest is still there under house property income....

Rest i can only comment when i would be sure...

I WOULD REQUEST EVERYBODY TO PLEASE DON'T JUMP THE GUN...IT IS A DRAFT AND FINAL WOULD BE PRETTY DIFFERENT FROM THIS ONE...PLUS THE MOST IMPORTANT THING IN THE NEW CODE IS NOT CLEAR....FROM WHEN DOES IT APPLY ??? 1st APRIL, 2011 COULD BE ASSESSMENT YEAR OR FIANCIAL YEAR....

 

[vasa1]

Diosys, while going through the Discussion to the Code, I got the impression that they will dispense with the phrases "previous year" and assessment year". I'll try and post a clip here.

4.16 Under the 1961 Act, the income earned in a year is taxed in the next year. The year
in which income is earned is termed as 'previous year' and the following year in which it is
charged to tax is termed as 'assessment year'. For example if a person earns any income
during the year beginning on 1 April 2006 and ending on 31 March 2007, then 2006-2007 will
be the previous year and the income shall be assessed to tax in assessment year 2007-2008.
The use of the two expressions has caused confusion in both compliance and administration.
In order to simplify the provisions, the separate concepts of 'previous year' and 'assessment
year' will be replaced by a unified concept of 'financial year'. The existing concept of
assessment year will be done away with. Under the Code, all rights and obligations of the
taxpayer and the tax administration will be with reference to the 'financial year'. This change
will not change the existing system of deduction of tax at source and payment of advance
tax in the year of earning of income and payment of self-assessment tax in the following year
before filing of tax return. This proposal will simplify the existing provisions.

 

[magnet]

Diosys, while going through the Discussion to the Code, I got the impression that they will dispense with the phrases "previous year" and assessment year". I'll try and post a clip here.

Agreed...assessment year and financial year term will be scrapped.....

As from what i heard on cnbc awaaz frm tax expert subhas lakhotia..if the draft is passed in parliament(it will b presented around december this year)...it will become a law and will come in affect from 1st April 2011...

And ya there are many stuff clarification needed....

Like earlier i was happy seeing wealth tax limit increase to 50 crore..and taxing it at just 0.25%...but from now what i m getting your present house property where u stay will also come under the wealth law....plus all your money in accounts(though i m yet not clear)

 

[vasa1]

Great discussion, guys :clapping::clapping:! Only one word of caution .... With PC's involvement in drafting the Code, we have to be very, very careful before assuming that a particular measure will benefit you / me. Sometimes, it has taken days to realise that ulta hua .

 

[magnet]

Great discussion, guys :clapping::clapping:! Only one word of caution .... With PC's involvement in drafting the Code, we have to be very, very careful before assuming that a particular measure will benefit you / me. Sometimes, it has taken days to realise that ulta hua .

Yup yup point noted melord.....................lol

 

[diosys]

Sometimes scrapping unsetteles many a thing which it should not...

For in the case of Assessment year....In a supreme court judgement it had been mentioned that any law which gets enacted on 1st April would apply to the assessment year that is to the financial year gone by....Any law which is enacted on 2nd April would apply to the forthcoming FY....

Now by dispensing off AY and stating that the code would come into effect from 1st April 2011 it can mean (going by the supreme court judgement) that it would come into effect from FY 2010-11 ....i.e. only 8 months away !!!