KPMG IN INDIA
DirectTaxCode2009-Highlights
TAX
Table of Contents General Provisions
1
Corporate Tax
2
International Tax
4
Tax Incentives
6
Capital Gains
7
Transfer Pricing Provisions
8
Mergers & Acquisitions
9
Personnel Taxation
10
Wealth Tax
12
Compliance and Procedural Provisions
12
Taxes Deduction at source
13
Trusts / Related Provisions
16
Other Residuary Provisions
17
Annexure
19
1
General Provisions
• TheDirectTaxCode(‘DTC’)2009istocomeintoforceon1April,2011,if enacted • Theconceptofpreviousyearhasbeenreplacedwithanewconceptof financialyearwhichinteraliameansaperiodof12monthscommencingfrom the1stdayofApril • Everypersonisliabletopayincome-taxinrespectofhistotalincomeforthe financialyearattherates/conditionsspecifiedintheSchedulestotheDTC afterallowingcreditforpre-paidtaxes(includingforeigntaxcredits) • Incomehasbeenproposedtobeclassifiedintotwobroadgroups:Income fromOrdinarySourcesandincomefromSpecialSources • IncomefromOrdinarySourcesrefersto: - Incomefromemployment - Incomefromhouseproperty - Incomefrombusiness - CapitalGains - IncomefromResiduarySources • IncomefromSpecialSourcestoincludespecifiedincomeofnon-residents, winningfromlotteries,horseraces,etc. • LossesarisingfromOrdinarysourcestobeeligibleforsetofforcarryforward andset-offagainstincomeonlyfromordinarysourceswithoutanytimelimit. SimilartreatmentforsetoffandcarryforwardoflossesfromSpecialsources.
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2
Corporate Tax
Tax Rates Category
ExistingRate
AsperDTC
Income-tax
30percent
25percent
Minimum AlternativeTax
Leviedat15percentofthe Taxongrossassets adjustedbookprofitsinthe introducedasunder: caseofthosecompanies - 0.25percentofgross whereincome-taxpayableon assetsforBanking thetaxableincomeaccording companies tothenormalprovisionsofthe - 2percentofgross Actislesserthanthesame. assetsforother companies
Dividend DistributionTax
15percent
15percent
• AcompanyisconsideredtobearesidentinIndiaifitisanIndianCompanyor ifitsplaceofcontrolandmanagementatanytimeduringtheyearissituated whollyorpartlyinIndia • InthecaseofaCompany,itsliabilitytopayincome-taxistobethehigherof thetwo: - Theamountofincome-taxliabilityonitsTotalIncomeiscalculatedatthe specifiedrates - Theamountofincome-taxliabilitycalculatedattheprescribedrateson grossassets(refertothetableabove) • Incomeofdistinctandseparatebusinessesi.e.wherethereisno interlacing,inter-dependenceandunityofbusinessesasstipulated,istobe computedseparately • Theambitofbusinessincomehasbeenwidenedtocover: - Profitonsaleofbusinesscapitalassets(fixedassets),undertakingundera slumpsaleandconsiderationwithrespecttoatransferofanyselfgeneratedbusinessasset - Thereduction,remissionorcessationofanyliabilitybywayofloan, deposit,advanceortradecredit - Amountaccruedorreceivedeitherasadvanceorsecuritydepositor otherwisefromtheleaseofassetsfornotlessthan12years,or agreementswhichprovideforextension(s)oftheleasetermsfornotless than12years
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3
Corporate Tax
• TheTaxDeprecationregimestipulates(keychangesindepreciationratesare givenintheannexure): - Depreciationtolesseeincaseofafinanceleaseandpaymentsforlease rentstobetreatedaspaymentstowardsprincipalandinterest - ManynewBlockofAssets/categoriesintroducedsuchasRails,Scientific ResearchAssets,FamilyPlanningAssets,DeferredRevenueExpenditure fore.g.Non-compete,VoluntaryRetirementSchemeandotheritemssuch asPreliminaryExpenses,etc. - Allowanceofdepreciationevenwherealltheassetsintheblockofasset aredemolished,destroyed,discardedortransferred • Anyexpenditureonwhichwithholdingtaxispaidaftertwoyearsaftertheend ofthefinancialyearinwhichthetaxwasdeductibleatsource,isnottobe allowedasadeduction • Nospecificprovisionsforchangeinshareholdingofunlistedpubliccompanies /privatecompaniesimpactingcarryforwardandset-offoflosses.
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4
International Tax
Tax Rates Category
ExistingRate
ForeignCompany 40percent
AsperDTC - 25percent - Forbranchesofforeigncompaniesin India,anadditionalbranchprofitstax of15percent(onaftertaxtotal income)isalsopayableresultingin EffectiveTaxRateof36.25percent
• AforeigncompanyisconsideredtobearesidentinIndiaifitsplaceofcontrol andmanagementatanytimeduringtheyearissituatedwhollyorpartlyin India • Incomefromthetransfer,directlyorindirectlyofacapitalassetsituatedin IndiashallbedeemedtoaccrueinIndia • IncomewouldbedeemedtoaccrueinIndiaevenifthepaymentismade outsideIndiaorservicesarerenderedoutsideIndiaandinotherstipulated cases • TheambitofFeesfortechnicalservices(FTS)hasbeenwidenedtoinclude developmentandtransferofdesign,drawing,planandsoftwareorsimilar services • TheambitofRoyaltyhasbeenwidenedtoincludetheconsiderationforuse/ righttouseoftransmissionbysatellite,cable,opticfibre,shiporaircraftand livecoverageofanyevent. • Thenetbasisoftaxationinrespectofroyaltyincome/FTSearnedbynonresidentsseemstobedoneawaywith. • Detailedanti-abuseprovisionsintroducedunderthehead‘GeneralAnti AvoidanceRule’(GAAR)inordertocurbtheincreasinguseofsophisticated taxavoidancemechanismsandmis-utilisationoftaxavoidanceagreements. ThetriggerpointsforGAAR,inter-alia,includelackofcommercialsubstance, misuseorabuseofbeneficialprovisions,lackofbonafidebusinessintent whileenteringintoarrangement. • Themannertoarriveatthetriggerpointshavebeenelaboratedwithdistinct illustrationsandcitingvariousincidents.Definitionsofkeytermsand conceptsalsoprovidedtohelpinanalysis/interpretation/applicationofGAAR. Finally,theGAARistooverridetreatyprovisionsonthepretextofcorrective actionagainsttaxevasions
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5
International Tax
• TheprovisionsoftheDTAAandtheDTChavebeenbroughtonparandthe provisionswhichareenactedatalaterpointintimetoprevail • FurnishingofTaxResidencyCertificateinprescribedformmademandatory forclaimingreliefundertheapplicableDTAA • TheCentralGovernmentistoprescribemethodsforcomputingtheforeign taxcredit,themannerofclaimingcreditandsuchotherparticularsasare necessaryfortherelieforavoidanceofdoubletaxation • Taxduefromnon-residentscouldberecoveredfromanyofhisassetsevenif situatedoutsideIndiaorfromanyamountpayablebyanypersontothenonresident. • Fornon-residents,headofficeexpenditureshallberestrictedtoone-half percentofthetotalsales,turnoverorgrossreceipts • Scopeofincomefromshippingbusinesscarriedonbynon-residentshipping companieshasbeenextendedtoincludeincomefromthearrangementof slotcharter,spacecharterorjointcharter.Further,theincomeoftheforeign shippingcompaniestobetaxedatthenormalrate.
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6
Tax Incentives
• Theprofit-linkedtaxincentivesandothertaxincentivesnotcoveredinthe DTCaretobegrandfathered. • TheDTCsubstitutesprofit-linkedincentiveswithanewschemewhereinany capitalexpenditureincurredforspecifiedbusinesseswillbeallowedasa deductibleexpenditureandthelossshallbeallowedtobecarriedforwardtill itisabsorbedcompletely. • Thenewschemewillapplytothefollowingbusinesses: - Generation,transmissionordistributionofpower - Developingoroperatingandmaintaininganyinfrastructurefacility - Operatingandmaintainingahospitalinspecifiedarea - Processing,preservationandpackagingoffruitsandvegetables - Layingandoperatingofacrosscountrynaturalgasorcrudeorpetroleum oilpipelinenetworkfordistribution,includingstoragefacilitiesbeingan integralpartofthenetwork - Settingupandoperatingacoldchainfacility - Settingupandoperatingawarehousingfacilityforthestorageof agriculturalproduce - Explorationandproductionofmineralornaturalgas - DevelopingaSpecialEconomicZone.
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7
Capital Gains
• Definitionofcapitalassetshavebeenmodifiedandreplacedwiththeterm investmentasset.Investmentassetdoesnotincludebusinessassetslikeself generatedassets,righttomanufactureandothercapitalassetconnected withthebusiness • Allgainsfromsaleofinvestmentassetwouldbeconsideredascapitalgains withoutanydistinctionastoshorttermandlongtermandistobetaxable. Further,theindexationfacilitywouldbeavailabletoallinvestmentassetsheld formorethanoneyear • Theindexationbasedateisproposedtobechangedfrom1April,1981to1 April,2000 • Inrespectofexemptionontransferofinvestmentassetsfromholding companytoWhollyOwnedSubsidiary(WOS)andviceversa,thepresentlock inperiodof8yearshasbeenproposedtobereplacedbyprovidingthatthe 100percentholding–subsidiaryrelationshipshouldnotceaseatanypointof timeandthetransfereeshouldnotconvertthecapitalassetintostockin trade • Ifthecostofacquisition/costofimprovementofanassetisnotdeterminable bythetaxpayer,forexampleinthecaseofself-generatedassets,thensuch costshallbetakenasnilandcapitalgainstobecomputed.
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8
Transfer Pricing Provisions
• AdvancePricingAgreement(APA)mechanismhasbeenintroduced.TheCBDT grantedauthorityforenteringintoanagreementinrespectofthearm’s lengthpricewiththetaxpayerforinternationaltransactions.Thesaid agreementwillbevalidforaperioduptofiveconsecutivefinancialyears unlessthereisachangeinlaworfacts.Theagreementwillbebindingon both-thetaxpayerandtaxauthorities • Coverageoftransferpricingregulationshasbeenexpandedbymakingthe definitionofterm“associatedenterprises”morestringentandloweringthe thresholdlimits.Forexample,shareholdingwith10percent(earlier26 percent)votingpower;loanamounting26percent(earlier51percent)oftotal assets;nominationofone-third(earlierone-half)directors;purchaseoftwothird(earlier90percent)rawmaterialandconsumables;wouldconstitutethe entitiesasassociatedenterprisesandhencebesubjecttotransferpricing regulations • ReportofInternationalTransactionscertifiedbyaCharteredAccountanttobe lodgeddirectlywiththeTransferPricingOfficerinsteadoftheAssessing Officer.TheTransferPricingOfficershallselectcasesforadetailedscrutiny auditbasedonriskmanagementstrategyframedbytheBoard,howeversuch strategyorcriteriawillnotbemadepublic • TransferPricingOfficershallhavethepowertomakeanadjustmenttothe arm’slengthpriceafterdueverification,howeverwillnotbesubjecttothe specificconditionswhichwereearlierapplicableincaseofadjustmentsmade byaTransferPricingOfficerorAssessingOfficer.
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9
Mergers & Acquisitions
• Definitionofamalgamationtoincludeamalgamationofafirm,AOP,BOIintoa companyandotherspecifiedformofre-organisation • Theconsiderationfordemergertobeintheformof‘equity’sharesissuedby theresultingcompanytoshareholdersofdemergedcompany • Profitonsaleofanundertakingunder‘slumpsale’willnotbetreatedas capitalgains.Suchprofitsshallformpartofincomefrombusinessincome. Deductionistobegiventotheextentofnetworthoftheundertakingsold • DTCdefines‘businessreorganization’;‘amalgamation’(Referencetothe CompaniesAct,1956incorporated);‘demerger’,‘successor’;‘predecessor’. • Successorcanclaimbenefitsofbusinesslossesofthepredecessor, irrespectiveofthenatureofbusinesscarriedoutbysuccessor/predecessor • Evensuccessorsincaseofabusinessre-organisationwouldbeeligiblefor deductionofthelossesoftheimmediatelyprecedingfiscalyear • Thepresentprovisionofprovidingexemptioninrespectoftransferofshares throughtheprocessofamalgamation/demergerofaforeigncompanywith anotherforeigncompanyisproposedtobeextendedtoallassets(i.e. investmentassets).
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10
Personal Taxation
Moderation of Tax Rates and increase in tax slabs • Newbeneficialtaxslabsareproposedtobeintroducedwhichwillreducethe taxburdenforindividuals • Peakrateof30percentapplicableonincomeexceedingINR25lakhs.
Definition of Residency and Scope of income • Definitionofresidenceproposedtobechanged.Aseparatecategoryof“Not OrdinarilyResident”andadditionalconditionof729daystoascertain residency,areproposedtobeabolished • Onlytwocategoriesoftaxpayersproposedviz.‘Residents’and‘Non residents’ • ResidentsareproposedtobetaxedonlyonIndia-sourcedincomeforinitial twoyears,iftheyqualifyasanonresidentintheprecedingninefinancial years.
Income from employment • Employmentincomeproposedtobecomputedasthegrosssalarylessthe aggregateofthespecifieddeductions • Popularexemptionssuchashouserentallowance,leavetravelconcession, leaveencashment,taxonnonmonetaryperquisitearetobornebythe employer,medicalreimbursementsetc.areproposedtobedeleted • PaymentinrelationtoVoluntaryRetirementScheme/Gratuity/Commuted Pensiondeductiblefromemploymentincomeifinvestedwithpermitted savingsintermediaries.
Withholding tax on employment income • Withholdingtaxonsalariesisnowproposedtobeapartoftheoverall consolidatedwithholdingtaxprovisionsonallpayments • Taxtobewithheldonpayment/credit.
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11
Personal Taxation
Income from house property • GrossRentproposedtobecalculatedashigherofcontractualrentora presumptiverateofsixpercentofrateablevalue/construction/acquisition cost • Deductiontowardsinterestonhousingloanonselfoccupiedpropertynot available • Deductionforrepairsandmaintenancereducedto20percentoftheGross Rent • Servicetaxdeductibleonpaymentbasis
Exempt-Exempt-Tax (EET) regime for savings scheme • Alllong-termretiralsavingsschemesareproposedtobemovedtotheEET regime • Contributions(bothbyemployeeandemployer)ofuptoINR3lakhstoany accountwithpermittedsavingsintermediariesisproposedtobedeductible • Accretionofincometillwithdrawalisexempt • Anywithdrawalmadeunderanycircumstancesistaxable.Withdrawals pertainingtoapprovedemployeeprovidentfundaccumulatedbalanceason 31March2011andaccretionsthereonnottaxable • Savingsfromoneeligiblesavingsschemetoanother,isnottobetreatedasa withdrawal • Permittedsavingsintermediariestoincludeapprovedprovidentand superannuationfunds,lifeinsurerandNewPensionSystemTrust.
Other Deductions • Aggregatedeductionsforabovereferredlongtermeligiblesavingsalongwith tuitionfeespaidproposedtobeincreasedfromINR1lakhtoINR3lakhs • Nofurtherinvestmentseligible.
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12
Wealth Tax
• Individuals,HUFandPrivateDiscretionaryTrustsareliabletowealthtax • Wealthtobetaxableat0.25percentofnetwealth • BasicexemptionlimithasbeenenhancedtoINR500million • Newconceptofwealthincludesallassets.Keyexclusionsfromnetwealth are: -assetslocatedoutsideIndiaofforeigncitizens/non-residentsindividuals/ HUFand -anyonehouseorpartofahouseoraplotoflandbelongingtoanindividual oraHUFwhichisacquiredorconstructedbefore1April,2000.
Compliance and Procedural Provisions
• NationalTaxTribunalonceestablishedwillexercisethepowersoftheHigh Courtwithcertainexceptions • AppealdoesnotliebeforetheIncome-taxAppellateTribunalagainsttheorder passedbytheCITdirectingtherevisionoftheassessmentorder • TheCommissionerofIncome-tax(Appeals)andtheIncome-taxAppellate Tribunalcannotcondonethedelayinfilingofappealifthedelayisformore thanayear.
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13
Taxes Deduction at source
Residentialstatus ofdeductee
Particularsof expenditure
Existingrates
Ratesproposed byDTC
Resident
Paymentfornoncompetefees
Nil
10percent
Amountreceived asremuneration orprizefor renderingany services
Nil1
10percent
NonResident
Rentforuseof 2percent plantormachinery orequipment
1percent
Paymenttoa Individual/HUF contractorfor workscontract
2percent
1percent
Anyotherincome
Nil
10percent
RoyaltyandFee fortechnical services
10percent
20percent
Capitalgains
- 40percent,in caseofshort termcapital gains
30percent
- 20percent,in caseoflong termcapital gains Anyotherincome (i.e.otherthan incomeonwhich specifiedrateis prescribed)
40percent
35
1 Existingrateforprofessionalortechnicalservicesis10percent
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14
Taxes Deduction at source
• Provisionsrelatingtotaxwithholdingfromvariouspaymentsaswellasrates oftaxwithholdingfrompaymentstoresidentsandnon-residentshavebeen includedinseparateschedulesinsteadofindependentsections.Further,the scopeoftaxwithholdingfromvariouspaymentstoresidentshasbeen expandedtoincludenon-competefeesandanyotherincome • Disallowanceofexpenditurefornonwithholdingoftaxornonpaymentoftax hasbeenextendedtoallpayments.Ifthetaxhasbeendeductedfromany paymentsduringthelastquarterofthefinancialyear(asagainstlastmonthof thefinancialyearasexistedhitherto)andsuchtaxispaidbeforetheduedate ofthefilingofreturnofincome,suchpaymentsshallbeallowablefor computingbusinessincome.Nodeductionwouldbegrantedinrespectofthe expenditurewherethetaxthereonhasnotbeenpaidwithinthetwoyears immediatelysucceedingthefinancialyear • Thescopeofwithholdingtaxatsourceforresidentdeducteehasbeen widenedbycoveringallcategoriesofincomeincaseofresidentsunless specificallyexempted2,anduniformityhasbeenachievedbycoveringall personsasthedeductorunlessspecificallyexempted.(viz.Individualsand HUFnotsubjecttotaxaudit.) • TheCentralGovernmentwillprescribetheframeworkandrulesinrelationto taxwithholdingprovisions,viz., • obtainingnilwithholdingtaxcertificate • grantingnilwithholdingtaxcertificate • filingreturnfortaxesdeductedatsource • reportingofpaymentswithrespecttointerestpayabletoresidentswithout withholdingtaxes • providecreditoftaxeswithheldatsource • TheDTCdoesnotprovideforobtainingalowertaxwithholdingcertificate fromtheAssessingOfficer. • Thebenefitofself-declarationbyapersonfornonwithholdingoftaxat sourcefromcertainpaymentsviz.interestincome,incomeonunitsofmutual funds,incomefromNSSdeposit,etc.isnotavailable.
2 Section200oftheProposedDTC
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15
Taxes Deduction at source
Return of Income and Assessment • Theduedateforfilingthereturnofincomefornon-corporatetaxpayersisto be30Juneoftheyearfollowingthefinancialyearandforotherassessesis tobe31August • Belated/Revisedreturncanbefiledwithin21monthsfromtheendofthe financialyearasstipulated • Noticesaretobeissuedtotaxpayer(referredtoinDTCasstop-filer)whohas filedhisreturnorwhohasbeenassessedintheprecedingfinancialyear,but hasnotfiledhisreturnfortherelevantfinancialyear • Anelectronicacknowledgementtobeissuedonreceiptofeachreturnoftax basesandinitialprocessingtobecompletedwithin12monthsfromthe monthinwhichthereturnisfiled • Selectionofcasesforscrutinywillbemadewithinfourmonthsfromtheend oftheyearinwhichthereturnisfurnishedinaccordancewitharisk managementstrategyframedbyCentralBoardofDirectTaxes,whichwillnot berevealedtoanymemberofthepublic • Thetimelimitforrectificationofmistakeintheorder/intimationistobetwo yearsfromtheendoftheyearinwhichtheorder/intimationispassed • Assessmenttobegenerallycompletedwithin21monthsfromtheendofthe financialyearinwhichthereturnisfurnished • Assessmentoftaxesaftersearchandseizureoperationstobetreatedastax baseescapedassessmentandwouldbesubjecttore-opening.
Penalty & Prosecution • Maximumamountofpenaltythatcanbeleviedisreducedto2timesfrom theexisting3timesofthetaxsoughttobeevaded • Inthecaseofindividualsandcooperativesocieties,penaltywillbecalculated atthemaximummarginalrateoftax
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16
Taxes Deduction at source
• Incertaincases,authoritytopasspenaltyorderisalsogiventoCITandCIT (Appeals) • PenaltyofamountuptoINR200,000proposedfornon-maintenance/nonfurnishingofcertaindocuments/informationincludingthoserelatingto internationaltransactionsandAccountant’sReports • Commissioner’spowertoreduceorwaivepenaltyandgrantimmunityfrom penaltyandprosecutionhasbeenremoved • EveryoffenceundertheDTCisnowpunishablewiththebothimprisonment andfinesapartfrommonetarypenalties • Thethresholdlimitsforcompulsorymaintenanceofaccountshasbeen changed.Persons,carryingonbusiness,arerequiredtocompulsorymaintain accounts,if: • hisincomefrombusinessexceedsINR200,000or • histurnoverorgrossreceiptsexceedsINR10,00,000inanyoneofthe precedingthreefinancialyears • wherethebusinessisnewlysetupinthefinancialyear,hisincomefrom
Trusts / Related Provisions
• Allfinancialintermediariessuchasmutualfund,venturecapitalfundand venturecapitalcompanies,etc.grantedpassthroughstatusandinvestors thereintobetaxedonincomeearnedfromsuchentities • Privatediscretionarytrusthavingsharesofbeneficiariesindeterminateand whicharenotnon-profitorganizationsandnotregisteredunderstipulated statutesmadeliabletowealthtaxinrespectofassetsowned.
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17
Other Residuary Provisions
• SecuritiesTransactionTaxisproposedtobeabolished • Theprovisionofgrantingofwaiverofinterestinspecifiedcircumstancesis reinstatedandtheCBDThasbeengrantedpowerstoprescribethe circumstances,themannerandothermattersinrelationtowaiverofthe interest.Thesaidpowersalsoencompassthewaiverofinterestreceivableby thetaxpayerfromthetaxdepartment.Theaggregateofamounttobewaived cannotexceed50percentofthetotalinterestliability • ItappearsthattheDTCdoesnotcontainanyprovisionswithrespecttothe SettlementCommission • Uniformtaxrateshavebeenprescribedforcollectionoftaxatsourcefor varioustransactions • Formulaforcomputingtheincomeforthepurposeoftonnagetaxhasbeen prescribedas: Theprofitsofthebusinessofoperatingaqualifyingshipforafinancialyear shallbedeterminedinaccordancewiththeformulai.e.A+B-C Where
A=
thetotaltonnageincomeofthefinancialyear
B=
theaggregateoftheamountscalculatedasdaily tonnageincomemultiplyingthenumberofdaysofthe shipsoperations
C=
theamountofnegativeprofitcomputedinrespectof thebusinessofoperatingaqualifyingship,forany financialyearimmediatelyprecedingtherelevant financialyear
• Aconceptofdeemedserviceofnotice,summon,requisitionoranyother communicationisproposed.Suchcommunicationcanbeservedbypostor anapprovedcourierore-mail,facsimile,etc.Wheresuchcommunicationis sentinanapprovedmanner,itshallbedeemedtohavebeenserved • TheDTClaysdownthefunctioningoftheCBDT-itsconstitution, management,delegation,functions,grants,accountsandauditinoneAct insteadofaseparateAct
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18
Other Residuary Provisions
• CBDThasbeenspecificallyrestrainedfromissuinganyorderorinstructionor directionorcircularsoasto: • ExtendthedatespecifiedunderDTCforcompletionofanyproceedingsor issuinganynoticeortakinganyactionbyanyincome-taxauthority • Relaxanyrequirementorconditioncontainedinanyoftheprovisionsofthe DTCinrelationtothegrantofanydeductionoranyotherreliefunderDTC • Admitanyapplicationorclaimforanyexemption,deduction,refundorany otherreliefunderthisDTCaftertheexpiryoftheperiodspecifiedbyor undertheDTCformakingtheapplicationorclaim • Exemptanyincome,partlyorfully,liabletotaxundertheDTC,unless otherwiseprovided • Allinternalorders,instructions,directionsandcircularsissuedbyCBDTwill bepublishedinataxbulletinorontheintranetoftheDepartment • Incaseofchangeinofficerorjurisdiction,thesucceedingofficerhasto continueanyproceedingsfromwheretheearlierofficerhasconcludedthe proceedings.Thisislikelytoreducethehardshipstothetaxpayersincaseof changeinofficers • Nointerestoncashseizedduringsearchandseizureoperations • Moreclarityinpowertoshareanddisclosetaxpayer'sinformationespecially inlightoftheRighttoInformationAct • TheManagingDirectororanyManagershallbejointlyandseverallyliablefor thetaxduesfromanycompanyiftheamountcannotberecoveredfromthe companyunlessheprovesthatnon-recoverycannotbeattributedtoany neglect,misfeasanceorbreachofdutyonhispart.
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19
Annexure
Key Changes in Depreciation Rates
SrNo
1
ClassofAssets
Building
2
Vehicles
3
MachineryandPlant
Blockofassets
Buildingsusedas,orforhotelsorboardinghouses,railwaystation, airport,seaportorbusterminal
Depreciationallowanceasa percentageofWDV Existing
Proposed
10
15
Buildingsacquiredonorafterthe1stdayofSeptember,2002for 100 installingmachineryandplantformingpartofwatersupplyprojector watertreatmentsystemandwhichisputtouseforthepurposeof businessofprovidinginfrastructurefacilitiesunderclause(i)ofSection 80-IA(4)
10
Commercialvehiclesforthepurposeofbusinessorprofessiondependingonthedateofacquisitionandputtouse
40/50/60
15
15
60
Machineryandplant,acquiredandinstalledonorafterthe1stdayof September,2002inawatersupplyprojectorawatertreatment systemandwhichisputtouseforthepurposeofbusinessof providinginfrastructurefacilityunderclause(i)ofSection80-IA(4)
100
15
• Returnablepackagesusedinfieldoperations(aboveground) distributionbypetroleumornaturalgasconcerns • Plantusedinfieldoperations(belowground)bypetroleumornatural gasconcerns
4
Scientificresearchassets
Allassets,otherthanland,usedforscientificresearch
-
100
5
Intangibleassets
Prescribedpreliminaryexpensesincurredbeforethecommencement ofbusinessorinconnectionwithextensionofbusinessorin connectionwiththesettingupofnewbusiness
-
25
Assetorprojectconstructed,erectedorsetupbytheassesseeif, benefitoradvantagearisestotheassesseeoverafixedperiodnot exceedingtenyears;andassetisnotownedbytheassessee
-
20
Assetorprojectconstructed,erectedorsetupbytheassesseeif, benefitoradvantagearisestotheassesseeoverafixedperiod exceedingtenyears;andassetisnotownedbytheassessee
-
15
• Non-competefee
-
25
6
Deferredrevenue expenditure
• Premiumforobtaininganyassetonleaseorrent • Voluntaryretirementpaymentmadeinaccordancewithanyscheme ofvoluntaryretirement
25
• ExpenditureincurredbyanIndiancompanywhollyandexclusively forthepurposesofbusinessreorganisation
25
• ExpenditureincurredbyapersonresidentinIndiawhollyand exclusivelyonanyoperationsrelatingtoprospectingforanymineral orthedevelopmentofamineorothernaturaldepositofany mineral,totheextentprescribed
15
Note:Theaboveinformation/detailisaspertheDirectTaxCode2009asreleasedbytheFinanceMinisteron 12August2009(www.finmin.nic.in)
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Pradip Kanakia Executive Director Head - Markets
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