direct tax code, bill 2009 kalani & co., chartered accountants jaipur kalani & co.,...
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DIRECT TAX CODE, BILL 2009
Kalani & Co., Chartered AccountantsJaipur
Kalani & Co., Chartered Accountants, Jaipur
DIRECT TAX CODE BILL, 2009
Scheme of the BillChapter I to XVI (Section 1 to 285)Part A (from Chapter II) to Part HEighteen Schedules
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Chapter – I: Preliminary (S. 1)• Short title, extent and
commencement
Chapter – I: Preliminary• Short title, extent and
commencement• Definitions• “Previous year” defined
Chapter XVI: Definition and Interpretation • Part H (S. 284, 285)
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961Chapter – II: Basis of Charge
(S. 2 to 10)• 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)
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.Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Chapter – III: Computation of Total Income
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)
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)
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Chapter – III: Computation of Total Income
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)
Chapter – IV: Computation of Total Income
Salaries• Salaries• Deduction from Salaries• Salary, perquisite and
profits in lieu of salary• Chapter III Exemptions
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Chapter – III: Computation of Total Income
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
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
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961Chapter – III: Computation of Total Inocme
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
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.
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961Chapter – III: Computation of Total Income
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
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.)
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961Chapter – III: Computation of Total Income
Income from residuary sources(S. 54 to 57)• Income from residuary
sources• Computation of income from
residuary sources• Gross residuary income• Deductions
Chapter – IV: Computation of Total Income
Income from other sources• Income from other sources• Deductions• Amounts not deductible• Profits chargeable to tax
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961Chapter – III: Computation of Total Income
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
Chapter – VI: Aggregation of Income and Set off or carry
forward of lossAggregation 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’
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961Chapter – III: Computation of Total Income
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
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.
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Chapter – III: Computation of Total Income
Maintenance of Accounts and other related matters (S. 83 to 85)
• Maintenance of Accounts• Tax audit• Method of accounting
Chapter – IVD and Section 145
• Section 44AA, 44AB & • Section 145
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961Chapter – IV: Special Provisions relating to Computation
of Non Profit Organizations (S. 86 to 96)• 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
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
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Chapter – V:Computation of the Value of Gross Assets and The Second Schedule (A )
• 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%
Chapter XII – B: Special Provisions Relating to Certain
Companies
Minimum Alternative
Taxes
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Part B – Dividend Distribution TaxChapter VI: Special Provisions relating to Tax on Distributed Income
and Second Schedule (B)
• Tax on dividends distributed (S. 99)• Second Schedule (para B)
– 15%
Chapter XVII – D: Special Provisions Relating to Tax on Distributed Profits
of Domestic Companies
Dividend Distribution
Tax
Kalani & Co., Chartered Accountants, Jaipur
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
DTC 2009 Vs. WT Act 1957
Part D –Chapter VIII: Charge of Wealth Tax & Second Schedule (D)
• 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)
WealthTax Act,1957
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009 Vs. IT Act 1961
Part E –Prevention of Abuse of CodeChapter IX: Special Provision to Prevent Evasion (S. 104 to 114)
• 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
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 securitiesKalani & Co., Chartered Accountants, Jaipur
DTC 2009Part 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
DTC 2009Part 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 reassessmentKalani & Co., Chartered Accountants, Jaipur
DTC 2009Part 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 collectorKalani & Co., Chartered Accountants, Jaipur
DTC 2009Part 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
DTC 2009Part F –Chapter XI: Collection and Recovery (S. 195 to 203)
A. 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 deductedB. Collection at source• Tax collection at source• Certain deinitions
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009Part F –Chapter XI: Collection and Recovery
C. Advance tax (S. 204)• Liability to pay advance income taxD. Tax credit for relief in respect of arrears or advance receipts (S.
205)• Tax relief for arrears or advancereceiptsE. Foreign tax credit (S. 206)F. Payment of Dividend Distribution Tax (S. 207)G. Payment of Wealth Tax (S. 208)H. 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
DTC 2009Part F –Chapter XI: Collection and Recovery
I. Refunds (S. 212)J. 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
DTC 2009Part F –Chapter XI: Penalties (S. 224 to 228)
• Penalty for under reporting of tax base• Penalty where search has been initiated• Penalty for other defaults• Procedure• Bar of limitation for imposing penalty
Part F –Chapter XII: Prosecution (S. 229 to 232)• 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
DTC 2009Part 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
DTC 2009Part 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
DTC 2009Part 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 CommissionKalani & Co., Chartered Accountants, Jaipur
DTC 2009Part 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 mattersKalani & Co., Chartered Accountants, Jaipur
DTC 2009Part 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 difficultiesKalani & Co., Chartered Accountants, Jaipur
DTC 2009Part G –Chapter XVI: Definitions
• Section 284 (1 to 312)• Section 285: Interpretation
Kalani & Co., Chartered Accountants, Jaipur
DTC 2009Schedules
• 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
DTC 2009Schedules
• 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