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Income Tax : The term of the Task Force for drafting New Direct Tax Legislation is extended by three months beyond the initial term of six mont...
Excise Duty : Circular No. 73/73/94-CX In the All India Conference of Collectors (Appeals) held recently at Bangalore on 6th and 7th October 19...
The definition of Capital asset continues in DTC. However the DTC classifies assets into two broad categories i.e. investment assets, and business assets. DTC envisages taxing income from transfer of investment assets as capital gains. Under the Income Tax Act 1961 (“Act”), income from transfer of capital assets even if used for business purposes was taxed as capital gain. DTC proposes to tax income from transfer of business capital assets as “business income” and the scope of definition of transfer is expanded to include business assets also.
Premium Punch:- At present, premium payment for a life insurance policy is tax-exempt provided the premium amount is not more than 20 per cent of the sum assured. Similarly, any sum received under a life insurance policy – be it money back at regular intervals, death benefit, maturity benefits, including bonus and loyalty additions – is tax-free.
Business Processing Outsourcing (BPO) centers in India would be subjected to taxation under the new proposed Direct Tax Code (DTC) but some clarifications, especially on double taxation, were still needed, an expert said. The (tax) exception given to BPOs has to be withdrawn under section 10 (A) of Income Tax Act. There is no provision in DTC for any such extension of benefits. The BPOs can be taxed on the basis of the profit they make in India and also overall profit.
The Direct Taxes Code Bill, 2009 breaks away from its predecessor in many significant ways when it comes to treatment of losses. While losses from the head capital gains remain a taboo and will have to be set off only against positive income under the same head of income, long-term capital losses do not come for a harsher treatment vis-à-vis the short-term capital losses for the simple reason that no such distinction is contemplated in the entire discussion on capital gains except in the context of allowing the benefit of indexed cost on assets held for more than one year.
The finance ministry is likely to retain the EET (exempt-exempt-tax) principle proposed in the Direct Tax Code on the lump sum amount a salaried taxpayer will receive from his investment in savings schemes such as the Public Provident Fund and other superannuation funds. This means while the contribution and accumulation are tax-free, withdrawal will be taxed at the marginal rate of income tax.
Industry body Assocham today asked the government to raise the tax exemption limit on personal income from Rs 1.6 lakh per annum to Rs 4 lakh per annum and for senior citizens up to Rs 5 lakh per annum. The industry body was giving its proposals on the draft direct taxes code which has been put in public domain by the government for comments.
With the mammoth task of garnering support on contentious issues like exempt exempt tax (EET) regime for savings and minimum alternative tax (MAT) still to be done, the Direct Tax Codes Bill, which will replace the archaic Income Tax Act, 1961, is not likely to be introduced in the ongoing Parliament session. According to official sources, the bill will be tabled in Parliament only in the Budget Session.
SB Mathur, Secretary General of the Life Insurance Council, said either the proposal be changed to retain the present system of exempting a life insurance holder from tax at the time of withdrawal, or tax should be levied only on the real value of the withdrawn sum.
The gems and jewellery industry wants provisions such as search and seizure and tax on gross assets in the Direct Taxes Code to be modified.It says these provisions could be detrimental to the sector’s growth which has been showing signs of recovery afterreeling under recession. Industry representatives also appealed to the Government to incentivise units in SEZs and EOUs.
Long-term life insurance policies are expected to grow in popularity if the EET (exempt exempt tax) regime under the proposed Direct Tax Code comes into force by 2011.According to Mr G.V. Nageswara Rao, Managing Director and CEO, IDBI Fortis Life Insurance, customers would choose long-term policies if the Government decides to tax the final lump sum of matured policies.
