1. Resident/non-resident definition: As per the DTC proposal, an NRI will be deemed as resident only if he has also resided in India for 365 days or more in the preceding four financial years, together with 60 days in any of these fiscal years. Only when the two criteria are met, an individual will be considered resident for taxation purposes.Even if an NRI becomes a resident in any financial year, his global income does not immediately become liable to tax in India. Global income would become taxable only if the person also stayed in India for nine out of 10 precedent years, or 730 days in the preceding seven years.
2. There is no resident but not ordinarily resident status which is abolished.
3. Proposed Tax slabs for F.Y.2012-13 is given below wherein there is no differentiation between male and female assessees:
|Annual Income||Tax Slab|
|Up-to INR 2,00,000 (for senior citizens 2,50,000)||Nil|
|Between INR 2,00,000 to 5,00,000||10%|
|Between INR 5,00,000 to 10,00,000||20%|
|Above INR 10,00,000||30%|
4. Leave Travel assistance will be taxed. Surcharge and educational cess are removed.
5. Under Sec.80C, an amount of Rs. 3 lakhs is allowed which is as follows:
a. upto Rs.1,00,000on Pension, PF and Gratuity funds( superannuation schemes including new pension scheme of Govt).
b. Upto 50,000 for expenditure on tuition fees, pure insurance premium on life and health cover including parents.
c. Up to 1.5 lakh for interest paid on housing loan.
6. DTC removes the following categories from 80C benefit. a)ULIPs, ELSS, Fixed deposits, NSC, Long term infra structure bonds, Housing loan principal repayment,stamp duty and registration fees on purchase of house property.
7. Under DTC, to be eligible for tax deduction, an insurance policy should give life cover of at least 20 times the annual premium. If this condition is not met, assessee will not get any tax deduction on the premium under 80 C and even the income from the policy will be taxable.
8. The repayment of principal of home loan will not be eligible for tax deduction under 80C. For repairs for rented accomodation, 20% of gross rent will be allowed instead of 30%. But there is also good thinking wherein there is removal of tax on notational rent. Presently, people who own more than one house have to pay tax on notational rental income even if second house is lying vacant. The DTC will remove this anomaly and make investment in second home more tax efficient. Another friendly move is that advanced tax received from a tenant will be taxed in year it relates, not when it was received.
Tax on dividends: Now dividend distributed by equity mutual funds will attract 5% dividend distribution tax. Dividend received from non-equity mutual funds will be taxable at investor’s hand as per his tax slabs. There will be a TDS of 10% if the dividend is more than Rs.10,000/- per year.
Corporate tax: Corporate tax reduced from 34% to 30%.
MAT(Minimum Alternte Tax):
A minimum alternate tax (MAT) is the one which is had to be paid by the companies that are enjoying various tax exemptions under different schemes. The Centre had proposed levying MAT on the book profits of the company – at the rate of 2% .However, due to practical difficulties in calculating the MAT for the loss-making companies as per the older version of the proposal, the revised draft code set out by the government says that the MAT should be calculated on the book profits. Thus, the new proposal would ensure that the loss-making companies do not get away from their legitimate taxation liabilities.
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