The government has released its revised discussion paper on direct tax code (DTC). The first draft had proposed a uniform corporate tax rate of 25%. The revised discussion paper addresses 11 issues which includes the issue of wealth tax and general anti avoidance rule.
The key highlights of the DTC 2.0 are:
- Minimum alternate tax is to be computed with reference to book profit
- Tax on provident fund and life insurance products are to be treated on EEE (Exempt – Exempt – Exempt) basis
- New ULIPs post DTC will not have EEE (Exempt – Exempt – Exempt) benefit. However, existing ULIPs will continue to get EEE (Exempt – Exempt – Exempt) benefit
- Perquisites to be taxed as per existing law
- Buying or selling securities by FIIs is to be charged capital gains
- FIIs will not to be subjected to tax deducted at source and will have to pay advance tax
- The current difference between long-term and short-term capital gains has been eliminated
- Capital gain is seen as income from ordinary source and is to be taxed at applicable rates
- Specific rate of deduction for capital gains is to be finalised
- Not to introduce capital gains on savings schemes
- To provide transition regime to move to long-term capital gains tax
- Securities Transaction Tax is to be calibrated based on revised capital gains tax regime
- Not to extend time for profit-linked sops for SEZs
- In case of conflict between Double Taxation Avoidance Agreements and domestic law, the law beneficial to taxpayer will be applicable
- Wealth tax to be levied as per Wealth Tax Act, 1957
- Invocation of general Anti-Avoidance Rule is to be accompanied by access to Dispute Resolution Panel
http://finmin.nic.in/Dtcode/index.html Direct Tax Code
http://finmin.nic.in/Dtcode/
