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DIRECT TAX CODE, BILL 2009

DIRECT TAX CODE, BILL 2009. Kalani & Co., Chartered Accountants Jaipur. DIRECT TAX CODE BILL, 2009. Scheme of the Bill Chapter I to XVI (Section 1 to 285) Part A (from Chapter II) to Part H Eighteen Schedules. DTC 2009 Vs. IT Act 1961. Chapter – I: Preliminary (S. 1).

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DIRECT TAX CODE, BILL 2009

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  1. DIRECT TAX CODE, BILL 2009 Kalani & Co., Chartered Accountants Jaipur Kalani & Co., Chartered Accountants, Jaipur

  2. DIRECT TAX CODE BILL, 2009 Scheme of the Bill Chapter I to XVI (Section 1 to 285) Part A (from Chapter II) to Part H Eighteen Schedules Kalani & Co., Chartered Accountants, Jaipur

  3. DTC 2009 Vs. IT Act 1961 Chapter – I: Preliminary (S. 1) Chapter – I: Preliminary Short title, extent and commencement Definitions “Previous year” defined • Short title, extent and commencement • Chapter XVI: Definition and Interpretation • Part H (S. 284, 285) Kalani & Co., Chartered Accountants, Jaipur

  4. DTC 2009 Vs. IT Act 1961 Chapter – II: Basis of Charge (S. 2 to 10) Chapter – II , III & V: Basis of Charge, Income which do not form part of Total Income, Income of other persons included in total Income Charge of income tax Scope of total income Spouse governed by PCC Residence in India Income deemed to be received Dividend income Income deemed to accrue or arise in India Income forming part of TI Income of other persons, spouse, minor child, etc. • Liability to pay income tax (FY, Rates: First /Second Sch. (A) • Scope of total income • Residence in India • Income deemed to accrue in India • Income deemed to be received in the F Y • Total income to include income of any other person Spouse, minor child etc. • Income not included in total income (Sixth Schedule) • Persons not liable to income tax (Seventh Schedule) Kalani & Co., Chartered Accountants, Jaipur

  5. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – IV: Computation of Total Income Heads of Income Heads of Income Exp. Incurred in relation to income not included in TI Section 40 (Chapter IV D) General (S. 11 to 18) • Interpretation • Classification of sources of income • Special Sources (First sch./rule3) (Computation as per Sch. 9) • Ordinary Sources • Spouses governed by PCC • Avoidance of Double Taxation (yearwise / personwise) • Exp. Not be allowed as deduction • Amount not deductible where no TDS (LQ allowable, otherwise two subsequent FY) Kalani & Co., Chartered Accountants, Jaipur

  6. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – IV: Computation of Total Income Salaries Salaries Deduction from Salaries Salary, perquisite and profits in lieu of salary Chapter III Exemptions Income from Employment (S. 19-22) • Income from employment • Computation of income from employment • Scope of gross salary • Deduction from gross salary • Salary [Section 284(244)] • Perquisite [S. 284(210)] • Profit in lieu of salary [S. 284 (220) Kalani & Co., Chartered Accountants, Jaipur

  7. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – IV: Computation of Total Income Income from house property Income from house property Annual value how determined Deductions Amounts not deductible Unrealised rent realised subsequnetly Arrear of rent received Property owned by co-owners Definitions Income from house property (S. 23 to 27) • Income from house property • Computation of income from house property • Scope of gross rent • Deduction from gross rent • Special provision from advance rent received Kalani & Co., Chartered Accountants, Jaipur

  8. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Inocme Chapter – IV: Computation of Total Income Profit & gains of B or P Profit & gains Computation Rent, rates, taxes, repairs and insurance for buildings Repairs & insurance of machinery, plant and furniture Depreciation Preliminary Expenses, Scientific Research Expenses, VRS etc. Partly used Buildings etc. Amounts not deductible Profits chargeable to tax Definitions Maintenance of Books & Audits etc. Income from business (S. 28 to 43) • Income from business • Distinct and separate business • Computation of income (Sch. X to XIV for specific business) • Gross earnings • Business Expenditure • Operating expenditure • Permitted finance charges • Computation of capital allowance • Computation of depreciation (Sch.XV) • Deduction for initial depreciation • Deduction for terminal allowance • Scientific research and development • Transfer of business capital asset • Business Reorganisations • Actual Cost • WDV, Adjusted value of assets Kalani & Co., Chartered Accountants, Jaipur

  9. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – IV: Computation of Total Income Capital gains Capital gains (S. 45, 46, 46A) Transaction not regarded as tfr. Withdrawal of exemption Mode of computation Cost w r to certain mode of acquisition Depreciable assets (S. 50, 50A) Slump sale (S. 50B) Full value of consideration (50C) Advance money received Exemptions (54, 54B, 54D, 54E, 54EC, 54F etc.) Capital gains (S. 44 to 53) • Capital gains • Income from certain transfers not to be treated as capital gains • Financial year of taxability • Computation • Full value of consideration • Deductions for cost of acquisition, inflation adjustments • Indexed cost of acquisition • Cost of acquisition of IA • Relief for rollover of investment asset Kalani & Co., Chartered Accountants, Jaipur

  10. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – IV: Computation of Total Income Income from other sources Income from other sources Deductions Amounts not deductible Profits chargeable to tax Income from residuary sources (S. 54 to 57) • Income from residuary sources • Computation of income from residuary sources • Gross residuary income • Deductions Kalani & Co., Chartered Accountants, Jaipur

  11. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – VI: Aggregation of Income and Set off or carry forward of loss Aggregation of Inocme Method of computing a member’s share in income of AOP/ BOI Cash Credit, Unexplained investment, unexplained money / expendiutre etc. Set off, carry forward and set off Set off of loss within sources Set off of loss within head Carry forward and set off of losses Prov. Relating to carry forward and set off of accumulated loss and depreciation allowance in amalgamation , demerger etc. Losses in speculation business Losses under the head ‘Capital gains’ Aggregation of income (S. 58 to 64) • Aggregate of income under the class ’Income from OS’ • Aggregate of income under the class ‘Income from SS’ • Determination of toal income • Special provisions relating to business reorganisation • Aggregation of losses in a case of change in constitution of unincorporated body • Aggregation of losses in case of certain companies • Aggregation of loss not be allowed in the case of filing of return after due date Kalani & Co., Chartered Accountants, Jaipur

  12. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – VIA: Deduction to be made in Computing Total Income Long List of Deductions. Now all deduction in respect of specified business incorporated in Schedule X to XIV. Tax Incentives (S. 65 to 82) • Deduction to be made in computing total income • For savings • Children education • Loan for higher education • Health insurance premia • Medical treatment etc. • Disable dependent • Donations / Sixteenth Schedule • Political contributions • Interest income on bonds • Investor protection fund • Income of trade unions • Royalty income of authors / patents • Person with disability • Banking Cooperative Societies • Primary Cooperative Societies • Family planning & HIC Aids Kalani & Co., Chartered Accountants, Jaipur

  13. DTC 2009 Vs. IT Act 1961 Chapter – III: Computation of Total Income Chapter – IVD and Section 145 Section 44AA, 44AB & Section 145 Maintenance of Accounts and other related matters (S. 83 to 85) • Maintenance of Accounts • Tax audit • Method of accounting Kalani & Co., Chartered Accountants, Jaipur

  14. DTC 2009 Vs. IT Act 1961 Chapter – IV: Special Provisions relating to Computation of Non Profit Organizations (S. 86 to 96) Chapter – III: Incomes which do not form part of total income Income from property held for charitable or religious purposes Income of trusts or institutions from contributions Conditions as to registration of trusts, etc. Procedure for registration Sec. 11 not apply in certain cases Special provision relating to income of political parties • Applicability of this Chapter • Total income of NPO • Computation of total income of a NPO • Gross receipts / Outgoing – Cash System • Prohibited forms and modes of investment • Deemed use or application of funds or assets for the benefit of interested persons • Registration of the non-profit organisation • Consequences of conversion of a non-profit organization • Provisions of this Chapter not apply in certain cases • Interpretations • First Schedule – Part C (Taxable @15%) • No accumulation / Set apart Kalani & Co., Chartered Accountants, Jaipur

  15. DTC 2009 Vs. IT Act 1961 Chapter – V:Computation of the Value of Gross Assets and The Second Schedule (A ) Chapter XII – B: Special Provisions Relating to Certain Companies Minimum Alternative Taxes • Computation of the value of gross assets (S. 97) • Preparation of balance sheet for computing gross assets (S. 98) • Second Schedule (A) • Tax on gross assets Banking company 0.25% Any other Company 2% Kalani & Co., Chartered Accountants, Jaipur

  16. DTC 2009 Vs. IT Act 1961 Part B – Dividend Distribution Tax Chapter VI: Special Provisions relating to Tax on Distributed Income and Second Schedule (B) Chapter XVII – D: Special Provisions Relating to Tax on Distributed Profits of Domestic Companies Dividend Distribution Tax • Tax on dividends distributed (S. 99) • Second Schedule (para B) • 15% Kalani & Co., Chartered Accountants, Jaipur

  17. DTC 2009 Vs. IT Act 1961 Part C –Chapter VII: Charge of Branch Profits Tax & Second Schedule (C) • Tax on branch profits (Section 100) (On foreign companies only) • Second Schedule (para C) • 15% Kalani & Co., Chartered Accountants, Jaipur

  18. DTC 2009 Vs. WT Act 1957 Part D –Chapter VIII: Charge of Wealth Tax & Second Schedule (D) Wealth Tax Act, 1957 • Charge of wealth tax (S. 101) only on Ind. / HUF / Pvt. Discretionary Trust • Second Schedule (para D) • Where NW does not exceed Rs. 50 Crores – Nil • Exceeds Rs. 50 Crores: 0.25% of the excess • Computation of net wealth (S. 102). One house or plot of land acquired before 1.4.2000 excluded • Net wealth to include certain assets (S. 103) Kalani & Co., Chartered Accountants, Jaipur

  19. DTC 2009 Vs. IT Act 1961 Part E –Prevention of Abuse of Code Chapter IX: Special Provision to Prevent Evasion (S. 104 to 114) Chapter X: Special Provisions relating to Avoidance of Tax Computation of income from international transaction having regard arm’s lenth price Meaning of associated enterprise, etc. Computation of ALP Maintenance of Records etc. Audit Report Transaction relating to transfer of income to NR Transaction in securities • Disallowance of exp. Having regard to FMV [Existing s. 40A(2)] • Computation of income from international transaction having regard to arm’s length `price • Computation of arm’s length price • Advance pricing agreement • Avoidance of IT by transaction resulting in transfer of income to NR, Sale and buy-back (vice-versa) transaction in security, etc. • Interpretation • Presumption of Purpose Kalani & Co., Chartered Accountants, Jaipur

  20. DTC 2009 Part F –Chapter X: Tax Administration and Procedure Tax Administration (S. 115 to 147) Establishment of institutions • Establishment of CBDT, Mgmnt. Of Board, Delegation, Term of office and conditions of service of Chairman and Member, Meetings, Secretariat of the Board, etc. • Establishment of Income tax Deptt. Income tax Authoriities , Appointment and Control of ITA, Power of higher authorities, Jurisdiction etc. • Search and Seizure, requisitions, survey etc. Kalani & Co., Chartered Accountants, Jaipur

  21. DTC 2009 Part F –Chapter X: Assessment Procedure (S. 148 to 169) • Self reporting of tax bases • Reporting of international transaction • Tax Return Preparer • Issue of notice to stop – filer / non – filer • Self assessment tax, Acknowledgement of return, processing • Selection of returns and notice for scrutiny assessment • Special audit • Determination of value of assets, ALP, • Determination of Impermissible avoidance arrangement and consequence thereof • Assessment, Best Judgment assessment • Directions for assessment by JC, Dispute Resolution Panel • Reopening of assessment, Rectification of Mistake • Notice of demand • Time limits for completion of assessment or reassessment Kalani & Co., Chartered Accountants, Jaipur

  22. DTC 2009 Part F –Chapter X: Procedure for assessment in special cases (S. 170 to 182) • Representative assessee, its rights and obligation • Direct assessment of recovery not barred • Remedy against property in case of representative assessee • Assessment upon business reorganization • Assessment after partition of a HUF • Assessment of non-resident in respect of shipping business • Assessment of persons leaving India • Assessment of entity formed for a particular event or purpose • Assessment of persons likely to transfer property to avoid tax • Assessment of firm in case of change in its constitution • Assessment on the retirement or death of the participant • Assessment of a deductor or collector Kalani & Co., Chartered Accountants, Jaipur

  23. DTC 2009 Part F –Chapter X: Appeals and Revision (S. 183 to 194) • Appeals to Commissioner (Appeals) • Form of appeal and limitation • Procedure in appeal • Powers of the Commissioner (Appeals) • Appellate Tribunal • Appeals to the Appellate Tribunal • Stay of demand by the Appellate Tribunal • Orders of the Appellate Tribunal • Appeals to the National Tax Tribunal • Appeals to the Supreme Court • Revision of orders prejudicial to revenue (No revision of order prejudicial to assessee is provided) Kalani & Co., Chartered Accountants, Jaipur

  24. DTC 2009 Part F –Chapter XI: Collection and Recovery (S. 195 to 203) • Deduction at Source, Third & Fourth Schedule • Liability to deduct tax at source • Payment of income and deduction of tax • Certificate for no deduction of tax • Payment of tax deducted, certificate to deductee, etc. • Reporting of payments without deduction of tax • No deduction of tax in certain cases • Credit for tax deducted B. Collection at source • Tax collection at source • Certain deinitions Kalani & Co., Chartered Accountants, Jaipur

  25. DTC 2009 Part F –Chapter XI: Collection and Recovery C. Advance tax (S. 204) • Liability to pay advance income tax D. Tax credit for relief in respect of arrears or advance receipts (S. 205) • Tax relief for arrears or advancereceipts • Foreign tax credit (S. 206) • Payment of Dividend Distribution Tax (S. 207) • Payment of Wealth Tax (S. 208) • Interest (S. 209 to 211) • Interest payable by Central Government • Interest payable to the assessee • Manner of computation of interest and waiver thereof to be prescribed Kalani & Co., Chartered Accountants, Jaipur

  26. DTC 2009 Part F –Chapter XI: Collection and Recovery • Refunds (S. 212) • Recovery (S. 213 to 223 and Fifth Schedule) • Recovery by Assessing Officer • Recovery by Tax Recovery Officer • Modes of Recovery • Tax Recovery Officer by who recovery is to be effected • Recovery of tax arrear in respect of non-resident from his assets • Recovery in the case of a company in liquidation • Liability of manager of a company • Joint and several liability of participants • Recovery of tax in pursuance of agreements with foreign countries • Tax Clearance Certificate in certain cases • Recovery by suit or under other law not effected Kalani & Co., Chartered Accountants, Jaipur

  27. DTC 2009 Part F –Chapter XI: Penalties (S. 224 to 228) Part F –Chapter XII: Prosecution (S. 229 to 232) • Penalty for under reporting of tax base • Penalty where search has been initiated • Penalty for other defaults • Procedure • Bar of limitation for imposing penalty • Chapter not in derogation of any other law or any other provision of this Code • Contravention of any restraint order • Failure to comply with the provisions of clause (d) of sub-section (2) of section 139 • Removal, concealment, transfer or delivery of property to thwart tax recovery Kalani & Co., Chartered Accountants, Jaipur

  28. DTC 2009 Part F –Chapter XII: Prosecution (S. 233 to 242) • Failure to comply with the provisions of sub-section (1) and (3) of section 218 • Failure to pay the tax deducted or collected at source or to pay the dividend distribution tax • Willful attempt to evade tax, etc. • Failure to furnish returns of tax bases • Failure to furnish other returns, statements, reports, etc. • Failure to comply with direction under this Code • False statement in verification, etc. • Falsification of books of account or documents, etc. • Abetment of false return, etc. • Offences by companies, etc. Kalani & Co., Chartered Accountants, Jaipur

  29. DTC 2009 Part F –Chapter XIII: Prosecution (S. 243 to 248) • Proof of entries in records or documents • Presumption as to assets, books of account, etc, in certain cases • Presumption as to culpable mental state • Prosecution to be at the instance of Chief Commissioner of Commissioner • Certain offences to be non cognizable • Disclosure of information by public servants Kalani & Co., Chartered Accountants, Jaipur

  30. DTC 2009 Part F –Chapter XIV: Advance Ruling (S. 249 to 257) • Definitions • Scope of Ruling • Authority for Advance Ruling • Procedure for advance ruling • Income tax authority or Appellate Tribunal not to proceed in certain cases • Applicability of Advance Ruling • Advance Ruling to be void in certain circumstances • Power of the Authority • Procedure of Authority No provisions related to Settlement Commission Kalani & Co., Chartered Accountants, Jaipur

  31. DTC 2009 Part G –Chapter XV: General (S. 258 to 269) • Agreement with foreign countries • Permanent account number • Tax account number • Document Identification Number • Certain transfer to be void • Provisional attachment to protect revenue in certain cases • Service of notice generally • Authentication of notices and other documents • Notice demand to be valid in certain circumstances • Service of notice when family is disrupted or unincorporated body is dissolved • Publication of information respecting assessees in certain cases • Appearance by registered valuer in certain matters Kalani & Co., Chartered Accountants, Jaipur

  32. DTC 2009 Part G –Chapter XV: General (S. 270 to 283) • Appearance by authorised representative • Rounding off of tax bases, tax, etc. • Indemnity • Power to tender immunity from prosecution • Cognizance of offences • S. 360 if CCP, 1973 and Probation of Offenders Act, 1958 not to apply • Return of tax base, etc. not to be invalid on certain grounds • Presumption as to material found • Bar of suits in civil courts • Power of rescind • Power to make rules • Rules and certain notifications to be placed before Parliament • Repeals and Savings • Power to remove difficulties Kalani & Co., Chartered Accountants, Jaipur

  33. DTC 2009 Part G –Chapter XVI: Definitions • Section 284 (1 to 312) • Section 285: Interpretation Kalani & Co., Chartered Accountants, Jaipur

  34. DTC 2009 Schedules • First: Rates of Income Tax • Second: Rates of Other Taxes • Third: Rates of deduction of tax at Source in the case of resident deductee • Fourth: Rates for deduction of tax at source in the case of non-resident deductee • Fifth: Procedure for recovery of tax • Sixth: Income not included in the total income • Seventh: Persons exempt • Eighth: Computation of profits of the insurance business • Ninth: Computation of income from any other special source • Tenth: Computation of profits of business of operating a qualifying ship Kalani & Co., Chartered Accountants, Jaipur

  35. DTC 2009 Schedules • Eleventh: Computation of the business of mineral oil or natural gas • Twelfth: Computation of profits of the Business of Developing a Special Economic Zone • Thirteen: Computation of profits of a specified business • Fourteenth: Determination of Income on a presumptive basis • Fifteenth: Depreciation • Sixteenth: Deduction for donation • Seventeenth: Determination of Cost of Acquisition in certain cases • Eighteenth: Minerals and Group of Associated Minerals Kalani & Co., Chartered Accountants, Jaipur

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