DIRECT TAX CODE, BILL 2009 Kalani & Co., Chartered Accountants Jaipur Kalani & Co., Chartered Accountants, Jaipur

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


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)


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


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)




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)


Salaries• Salaries• Deduction from Salaries• Salary, perquisite and

profits in lieu of salary• Chapter III Exemptions




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


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


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


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.


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


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.)



Income from residuary sources(S. 54 to 57)• Income from residuary

sources• Computation of income from

residuary sources• Gross residuary income• Deductions


Income from other sources• Income from other sources• Deductions• Amounts not deductible• Profits chargeable to tax



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’



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.




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


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



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



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



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%


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



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.


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


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


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.


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


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


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


Documents

DIRECT TAX CODE, BILL 2009 Kalani & Co., Chartered Accountants Jaipur Kalani & Co., Chartered Accountants, Jaipur