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3. Surcharge and education cess are abolished.

The New  Direct Tax Code (DTC) is said to replace the existing Income Tax Act of 1961 in India . It is expected to be enforced from 2012. DTC bill was tabled in parliament on 30th August, 2010. There are big changes now in monsoon session.

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3. Surcharge and education cess are abolished.

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  1. TheNew  Direct Tax Code (DTC) is said to replace the existing Income TaxAct of 1961 in India. It is expected to be enforced from 2012. DTC bill was tabled in parliament on 30th August, 2010. There are big changes now in monsoon session.

  2. DTC removes most of the categories of exempted income. ULIPs, Equity Mutual Funds, Term deposits, NSC ,Long term infrastructures bonds stamp duty and registration fees on purchase of house property will loose tax benefits. • Only half of Short-term capital gains will be taxedLong term capital gains (Earlier exempted) are still exempted from income tax.

  3. 3. Surcharge and education cess are abolished. 4. Statutory deductions under house property reduced from 30% to 20%. Also all interest paid on house loan for a rented house is deductible from rent. 5. Tax exemption on LTA (leave travel allowance) is abolished. 6. Corporate tax reduced from 34% to 30%. 7. For long term capital gain instead of flat rate of 20% of gain now it will be taxed as per the tax slab.Base date has been changed to 1st April, 2000 from 1st April, 1981. 8. Medical reimbursement limit increased from 15000 to 50,000 per year. • Dividends will attract 5% tax.

  4. Income and Wealth Tax Rates New limit of tax exemption Rs 2 lakh, with no separate benefit for women and for senior citizens it is 2.5 lakhIncome from Rs 2-5 lakh @10 %; Rs 5-10 lakh @20% and 30 % thereafter. Corporate tax to be a flat 30 %. MAT@ 20% of book profit of a company. Dividend Distribution Tax will be at 15 percent. Exemption limit for Wealth Tax Rs 1 crore. Wealth tax to be charged @ 1%, except on non-profit organisations which are exempt.

  5. Tax Audit Limits Tax Audit Limits raised to Rs 25 lakh for professionals and upto Rs 1 crore for business. ExemptionsExemption of interest up to Rs 1.5 lakh on housing loan retained. LTATax incentives on leave travel allowance to be scrapped.

  6. Small investors with STCG between Rs 2 to5 lakh to pay 5 % tax between Rs 5 to10 lakh will pay 10 %tax and above Rs 10 lakh @15 %.

  7. Why DTC The government wanted to modernize and upgrade its direct tax laws i.e. the Income Tax Act and the Wealth Tax and bring them more in line with the international tax laws.The basic purpose is to attract and facilitate foreign companies in Indian markets, FIIs and cross-border M&As.

  8. Unanswered Questions • Up to which limit the interest paid on education loan would be exempt from income tax? • Deduction of up to Rs. 20,000 under section 80CCF whether available on investment in infrastructure bonds? 3. The limits up to which retirement benefits like gratuity, leave salary, etc. will be exempt from income tax? 4. The treatment of perquisites?

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