Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: cpt :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: VAT Audit :: list of goods taxed at 4% :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: TDS :: empanelment
 
 
Direct Tax »
 Government sets up a panel to draft new direct tax law
 High court judges, experts brainstorm on likely GST litigations
 Businesses need not deduct GST on advances received for goods supply: CBEC
 Redress taxpayers' grievances on priority: CBDT to I-T department
 No tax relief on EPF interest if not employed: ITAT
  CBDT signs 7 more unilateral APAs with taxpayers
 Income tax returns (ITR) filing: Get capital gains tax exemption on new property; here is how
 Reach out to non-filers of GST returns: CBEC to fields offices
 CBDT may shelve plan to seek corporate tax estimates in advance
 IT expertise at banks' board level a must, says RBI ED
 Clarification on Indirect Transfer provisions in case of redemption of share or interest outside India under the Income-tax Act, 1961

Revised Direct Taxes Code
August, 11th 2010

Though the tax exemption for long-term capital gains from equities was taken away, there were other rewards waiting for patient investors.

What could possibly be wrong with a bill that exempts retirement savings from taxation, charges tax at a lower rate on certain capital gains and restores the tax-free status of some allowances? The revised Direct Taxes Code (DTC) does this and more. Yet, the average taxpayer stands to lose from the watereddown provisions of one of the most important tax reforms in decades.

Goodbye to simplicitY:
When the original DTC was made public in August 2009, one of its main objectives was to simplify the rules and make the tax structure more equitable. It proposed to remove the distinction between long-term and short-term gains and tax all types of income-from stocks, bonds, gold, real estate or artifacts-at a uniform rate. Though the tax exemption for long-term capital gains from equities was taken away, there were other rewards waiting for patient investors.

The DTC offered indexation benefits for equity investments. Indexation adjusts the purchase price of an asset with inflation during the holding period, thus reducing the capital gains and tax payable on this. Also, investors could carry forward losses and adjust them against future gains.

However, the revised DTC has proposed a complex calculation for tax on long-term capital gains from equities. Investors will be allowed a deduction on the long-term gains and the balance amount will be taxed at the marginal rate. Worse, investors will no longer be allowed to claim indexation benefits or carry forward losses from equities.

What's wrong with eee? The DTC proposal to tax retirement savings at the time of withdrawal had evoked loud protests. The shift from the exemptexempt-exempt (EEE) regime to the exempt-exempt-tax (EET) model was perceived as radical and insensitive. The critics missed the woods for the trees.

The EEE model encourages premature withdrawals. If there were a tax on withdrawals, an investor would think twice before taking money from his retirement corpus while he is still in the high-income bracket. By reverting to EEE, the revised draft goes against the basic principle of retirement planning: investments gain from the power of compounding.

Penny wise, pound foolish:
To ease the burden on taxpayers, the DTC had introduced very liberal tax slabs. For a person earning Rs 12 lakh a year, the tax would be only Rs 74,000, an effective rate of about 6%. But the government may now be forced to tweak the slabs to account for the shortfall in revenues due to the EEE regime and lower tax on capital gains. If the slabs are changed, taxpayers may lose more than they gain.

Even so, the revised draft has some good points. Till now, income from pension products was taxable. It will now be exempt, which renders NPS and other pension plans attractive.

Secondly, it has clarified that income from insurance plans shall be taxed with prospective effect. It has also restored the tax deduction on home loans, which must come as a relief for millions of borrowers who had factored in the tax savings before going in for a home loan.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Customer relationship management software CRM software Operational CRM Collaborative CRM

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions