Proposed DTC allows tax Audit by Company Secretaries and Cost Accountants also

Tax Audit under the Income Tax Act is currently allowed to be conducted only by the chartered accountant within the meaning of  the Chartered Accountants Act, 1949 and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act but Proposed Direct Tax Code 2013 allows Tax Audit to be conducted not only by Chartered Accountants but also by Company Secretaries and Cost Accountants.

Clause 88 of the Proposed Direct Tax code prescribes who needs to get the book audited under the direct tax code 2013 and it further says that the same needs to be audited by an accountant. The Term accountant is been defined in Clause 320(2).

Lets read the provisions as per Clause 88 and Clause 320(2)

Direct Tax Code 2013

Audit of accounts and reporting of international transaction

88. (1) Every person, who is required to keep and maintain books of account under section 87 shall get his accounts for the financial year audited—

(a) where the person is carrying on one or more professions , the aggregate gross receipts of such profession or professions exceed twenty-five lakh rupees in the financial year;

(b) where the person is carrying on one or more businesses , the aggregate total turnover or gross receipts, as the case may be, of such business or businesses exceed one crore rupees in the financial year.

(2) The audit of the accounts referred to in sub-section (1) shall be carried out by anaccountant and the report of audit be obtained in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

(3) The person referred to in sub-section (1) shall furnish the report of audit referred to in subsection (2) to the assessing officer on or before the due date, in the manner as may be prescribed.

(4) The provisions of sub-section (1) shall not apply to the business where the income therefrom is determined under paragraph 1 of the Eleventh Schedule.

(5) A person shall be deemed to have complied with the provisions of sub-section (1), if the person—

(a) gets the accounts of his business audited as required by, or under, any other law for the time being in force, before the due date; and

(b) obtains by the due date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under sub-section (2).

(6) A person referred to in sub-section (2) of section 87 shall furnish a report of the international transaction or the specified domestic transaction entered into during the financial year to the Transfer Pricing Officer and the Assessing Officer on or before the due date, in the manner as may be prescribed.

(7) The report referred in sub-section (6) shall be obtained from an accountant in such form duly signed and verified in such manner, as may be prescribed.

Meaning of Accountant as per Clause 320 (2) 

320. In this Code, unless the context otherwise requires —

(1) *******

(2) “accountant”means a chartered accountant within the meaning of the Chartered Accountants Act, 1949 and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act, and shall include-

(i) a company secretary within the meaning of the Company Secretaries Act, 1980 ;

(ii) a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 ; or

(iii) any person having such qualifications as the Board may prescribe, for the purposes specified in this behalf.

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Direct taxes bill likely in winter session: FM

The Direct Taxes Code Bill, which seeks to replace the archaic Income Tax Act, is likely to be placed in Parliament during the winter session, Finance Minister P Chidambaram said today.

“We are trying to bring DTC in the next session,” the minister told reporters here.

The winter session may start in early December, after the completion of assembly elections in five states.

The final draft of the DTC Bill, which has to be vetted by the Cabinet, keeps the income tax exemption limit unchanged at Rs 2 lakh for individuals. It proposes to introduce a fourth slab with a 35 per cent tax rate for those with an annual income of over Rs 10 crore.

Among other things, the bill proposes to levy a 10 per cent tax on dividend income exceeding Rs 1 crore.

The minimum alternate tax may be levied on book profit and not on gross assets, sources said. Further, the securities transaction tax is likely to be retained, as against the recommendation of the Standing Committee on Finance that the levy be abolished.

At present, tax is levied on income of Rs 2-5 lakh at 10 per cent, Rs 5-10 lakh at 20 per cent, and above Rs 10 lakh at 30 per cent. Further, those earning more than Rs 1 crore have to pay a surcharge of 10 per cent.(Thehindu)

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Direct Taxes Code: Super rich with over Rs 10-crore income may have to pay 35% tax

The super rich may have to pay more as the government strives to raise revenues to meet its commitment to rating agencies and markets to bring down fiscal deficit.

The government is proposing a 35% tax rate for those earning more than Rs 10 crore in the Direct Taxes Code (DTC) that is likely to be tabled in Parliament during the ongoing session. The Union Cabinet will consider the code on Thursday. The direct taxes bill, once approved by Parliament, will replace the current Income-Tax Act, which dates back to 1961.

At present, taxable income in excess of Rs 10 lakh is taxed at 30% while those earning more than Rs 1 crore have to pay a surcharge of 10%. Further, since top earners receive substantial income by way of dividends, the Direct Taxes Code incorporates a 10% tax on dividend income in excess of 1 crore.

In the current dispensation, dividend income is tax-free in the hands of the investor as the company distributing dividends pays a dividend distribution tax at the rate of 15%.

Few Crorepati Taxpayers

"The government should have looked at a new design architecture for taxing dividends in the hands of recipients as dividend distribution tax adds to the overall corporate tax rate," said Sudhir Kapadia.

The corporate tax rate is proposed to be retained at 30% while the Securities Transaction Tax, which has faced vehement opposition from market participants, will stay in place.

There are only a few thousand income-tax payers that earn more than Rs 10 crore, but they account for a significant percentage of the tax paid. In 2011-12, only 1.3 lakh assessees had income in excess of Rs 20 lakh, but they accounted for 63% of the total personal income-tax collected.

Finance Minister P Chidambaram had said in his budget speech that there were only 42,800 taxpayers with income in excess of Rs 1 crore. Those earning over Rs 10 crore are likely to be a lot less, though exact numbers are not in public domain.

Many experts see these low numbers as evidence of widespread tax evasion. Political contribution of up to 5% of gross total income will be eligible for deduction.

The bill proposes to levy wealth tax at the rate 0.25% for those with assets exceeding Rs 50 crore. The new tax law, if passed by Parliament, would come into effect from April 1, 2015.

The DTC, as originally conceived by Chidambaram, had sought to radically reform and simplify the over 50-year-old Income-Tax Act by reducing tax rates to expand the base of taxpayers while doing away with exemptions. But before the draft could be made public, he moved to the home ministry.

BREAKING THE CODE
The amendments to the DTC Bill, 2010, that Cabinet may consider

35%: A higher income-tax rate for those earning more than Rs 10 cr a year

Rs 2 lakh: The current exemption limit might be retained

DDT: Additional dividend distribution tax on dividend income of over Rs 10 crore

Fast-track courts: For black-money cases

Settlement commission: Body to resolve tax disputes may be done away with

Threshold: Indirect-transfer shares on which capital gains tax is to be imposed may be defined

Exemption: That from tax on maturity of some long-term saving instruments may continue

MAT: May be retained on book profits, instead of gross assets

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Due Date Reminder

Guys this is amazing Due Date Reminder having following features:

1. If event had already occured. when event had been occured it will give messsage automatically
2. If it is event date than it will turn in to Red colour
3. If there is only 15 days remaining to date it will change its colour

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Budget 2012-13

Highlights Union Budget 2012 1 .Unlocked
To Download file Click Here
You may Also Like: Service Tax Provisions 2012

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What is DTC and Other Taxes??

Direct Taxes: It's the tax individuals & companies pay directly to the govt.

Corporation Tax: It's the tax companies pay (30% at present) on their profits.

Taxes On Income Other Than Corp Tax: It's income-tax paid by individuals or 'non-corporate assessees'. This ranges from 10% to 30%, depending on income.

Securities Transaction Tax ( STT): Applicable if you're dealing in shares or mutual fund units. It was introduced in the 2004-05 budget, replacing the tax on profits earned from the sale of shares held for more than a year (known as long-term capital gains tax).

Minimum Alternate Tax (MAT): Indian companies pay 30% tax on profits as per the I-T Act. But tax holidays could lower the outgo. If a company's tax liability is less than 10% of its profits, it has to pay a MAT of 18.5% of book profits. This provision is expected to change once the direct taxes code (explained below) proposals are accepted. Under DTC, MAT will be levied on gross assets.

INDIRECT TAXES: It's essentially a tax on expenditure. Considered regressive, this tax does not distinguish between the rich and the poor and hence most governments prefer to raise their revenues through direct taxes.

Customs: Anything you bring from abroad comes at a price. By levying a tax on imports, the government achieves twin objectives: it raises revenues and protects local industries.

Union Excise Duty: Imposed on goods manufactured in the country.

Service Tax: You pay the govt when you eat out or visit your hairdresser -- it is a tax on services rendered. Levied on 119 activities.

Value-Added Tax: State governments levy this on goods at the point of sale, based on the difference between the value of the output and the value of inputs used to produce it. The aim here is to tax a firm only for the value it adds to the inputs, and not the entire input cost. Thus, VAT helps avoid a cascading of taxes.

TAX REFORMS GOODS AND SERVICES TAX: The proposed GST is expected to streamline the indirect tax regime. It contains all indirect taxes levied on goods, including central and state-level taxes. Billed as an improvement on the VAT system, a uniform GST is expected to create a seamless national market. It could also mean lower taxes.

DIRECT TAXES CODE: The I-T Act came into effect nearly half a century ago. To account for the new business and activities that have come since then, the government formulated the DTC. It proposes to simplify tax laws and include a new way to calculate taxes on income
Source:Economictimes

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Highlights of Standing Committee Report on DTC bill, 2010

The Standing Committee on Finance has submitted its 49th Report on the Direct Tax Code 2010 to Parliament today, 9th March 2012. The Committee has noted that it has considered the suggestions of the Income Tax Appellate Tribunal Bar Association.

• Following is the Recommended revised tax slabs for personal income-tax:-

  
  
  

• Wealth Tax: – Wealth Tax exemption limit is recommended to increase from Rs.1 crore as proposed in DTC Bill, 2010 to Rs. 5 crores. Further a slab rate is introduced for taxing wealth instead of current flat rate of 1%.

Net Wealth (Rs. in crores)      Wealth Tax Rates

0-5                                 Nil

5-20                               0.5%

20-50                              0.75%

50 and above                  1%

• Limit of deduction u/s 80 C recommended to increase from Rs 1, 00,000 to Rs 1, 50,000.

• Monetary limit mentioned under section 80GG is recommended to increase from Rs 2000 per month to 5000 per month.

  
  

  The salient points of the Report are the following:

  (i) On the aspect of whether professionals from related professions can be appointed Accountant members of the Tribunal, the Committee observed that the Ministry’s reasoning for non-inclusion of related professionals in the definition of Accountant Member was a very strict construction of the term and not acceptable. It suggested that the scope should be widened.

  
  

  (ii) It is noteworthy that on the issue as to whether a Chief Justice of the High Court should be appointed President of the Tribunal, the Committee does not appear to have expressed any reservation on this proposal.
  
  

  (iii) On transfer pricing, the Committee appreciated that the proposed transfer pricing regulations to determine “arm‟s length price” for international transactions have been specially intended as an anti-abuse measure to prevent tax evasion through transactions with notified non-cooperative jurisdictions or certain specified locations. It emphasized that hardship to tax payers should be avoided by excluding purely commercial transactions between unrelated parties from its purview. It also stated that a monetary threshold should be prescribed for granting exemption from these regulations to small and economically insignificant transactions.
  
  

  (iv) On GAAR, the Committee noted the apprehensions expressed by different stakeholders on the applicability of GAAR proposals and recommended that the Ministry and the CBDT should seek to bring greater clarity and preciseness to the scope of the provisions. There should be certainty on these provisions so that foreign investors do not become wary of investing in the country. It pointed out that the conditions dealing with “misuse or abuse of DTC provisions” and the “manner applied for the arrangements not for bona fide business purpose” and “lacks commercial substance”, being very widely worded and being subjective, need to be more specifically defined to avoid undue discretion to tax authorities. The Committee pointed out that the onus should rest on the tax authority invoking GAAR and this should not be shifted to the taxpayer. The Committee made specified certain aspects that neeeded to be carefully considered before finalizing the GAAR proposals.
  
  

  (v) The Committee has suggested raising the income tax exemption limit to Rs 3 lakh and also hiking deduction on savings to Rs 2.5 lakh.
  
  

  (vi) The Committee has suggested that the limit for total tax saving deductions, which include investment in provident fund, life insurance, children education and infrastructure bonds, be raised to Rs 2.5 lakh from Rs 1.2 lakh. At present, investments up to Rs 1 lakh in specified instruments are deducted while calculating the tax liability. In addition, investments up to Rs 20,000 in infrastructure bonds are also exempted from tax.
  
  

  (vii) The Committee has stated that the wealth tax ceiling should be substantially increased to Rs 5 crore from Rs 1 crore currently to reflect the current realities, and beyond that limit, tax should be payable on slabs basis.
  
  

  (viii) The Committee has suggested that the proposed 60 days stay for non-resident Indians to retain their non-residential status be relaxed and restored to the existing 182 days, subject to conditions.
  
  

  (ix) The Committee has recommend that the definition of “house property‟ should be re-drafted so that the distinction between commercial and non-commercial property is clearly brought out.
  
  

  (x) No change in the 30 per cent tax rate on corporates proposed.
  
  

  (xi) The Committee has recommended that the ministry could explore the possibility of abolishing the Securities Transaction Tax (STT), while correspondingly calibrating the Capital Gains Tax regime – both short term and long term. Accordingly, the distinction between listed and unlisted securities should be removed. It should also be ensured that companies do not escape paying capital gains tax on the basis of Double Taxation Avoidance Agreements (DTAAs). A large number of foreign institutional investors invest through Mauritius to avoid paying tax on capital gains in India.

  To download complete report click standing_committee_report_DTC_2010

  You may also like : Direct Tax Code
  

  

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Direct tax Code 2011 cleared by Cabinet

• Effective Date : April 1, 2012
• New Direct Tax Code 2011: Major relief for salaried class
• The new provisions under the Direct Tax Code are as follows:
• Tax for income between Rs. 2 lakh – Rs. 5 lakh: 10%
• Tax for income between Rs. 5 lakh – Rs. 10 lakh: 20%
• Tax for income over Rs. 10 lakh: 30%
• Corporate tax has been kept at 30%.
• The limit for exemptions for salaried people is Rs. 2 lakh including resident women, while that for senior citizens is Rs. 2.5 lakh.
• Under the DTC Bill, the annual deduction has been raised to Rs. 1.5 lakh.
• The Government has also proposed to restore back the taxation of retirement savings, in the nature of provident fund contributions and pure life insurance and annuity products, to the Exempt-Exempt-Exempt scheme from the earlier proposition of Exempt-Exempt-Tax scheme
• Wealth tax under the provisions of initial DTC, was required to be paid only on wealth in excess of Rs. 50 crores at a tax rate of 0.25% but on all assets including financial assets i.e. investments in shares. Under the current tax regime, wealth tax is required to be paid @ 1% on wealth in excess of Rs.30 lakhs.
• Currently under the Act, no tax is required to be paid on securities held for more than a year from the date of acquisition and sold on the stock exchange on which securities transaction tax is paid. In addition to this, for securities held for less than one year, the tax liability is restricted to 15%. However, under the DTC, there has been some relief granted to the tax payers by providing for a specified percentage deduction from income / indexation benefit depending on the nature of security on assets held for long term. However, in case of short-term assets, there is no relaxation to the taxpayer and tax will be required to paid as in case of any other ordinary income. 

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Ditect Tax Code

•Direct Tax Code will replace Income tax Act, 1961 and Wealth tax Act (Covering Income Tax, TDS, DDT, FBT and Wealth tax).  Shall come into force on the 1st day of April, 2012. The code consists of 285 sections 

General Provisions:

To eliminate confusion, only ‘Financial Year’ will prevail. •

Date of filing of tax return has been advanced to 30th June for non-business non-corporate assessee and 31st Aug for others...•

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