We have been able to obtain a copy of the Direct Tax Code Bill as Introduced by the Government in the Lok Sabha. As discussed earlier by our Analysts, the content in the new bill is very similar. Major Changes apart from what is already discussed is,
- Applicable from 1st March 2010. That means it will be applicable for Citizens filing IT returns on or after April-1st 2013.
- 5% Dividend Income Distribution tax to be Paid by MutualFunds [AMCs] and ULIPs [Insurance companies]
- The short-term capital gains tax, currently levied at 15%, would now be levied at 50% of the three income tax slabs of 10%, 20% and 30%, i.e. 5%, 10% and 15%. Additionally, status quo is maintained on long-term capital gains tax that would continue to attract no tax subject to the levy of Securities Transaction Tax (STT)
- Exemption Limit goes up from Rs 100,000 + Rs 20,000 [Infra Bonds] to Rs 100,000 + Rs 50,000 [for Health and Life Insurance]
The Following Chart shows the Comparison of Existing Tax Code Vs New Direct Tax Code in India
Capital Gains for Resident Indians – In cases (non-equity related asset), long-term capital gains tax rate will increase to 30% (from the current 20%) for taxpayers in highest tax bracket or corporate tax payers, while short-term capital-gains tax rate remains unchanged.
You can download the entire bill as introduced in the parliament is here.
I somehow wonder that was there any need to introduce a New Direct Tax Code??
As in when only such minute changes were supposed to be brought in, they could have easily been brought in by making Amendments to the Existing Income Tax Act and there was no need of a New Direct Tax Code