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TAX ASSIGNMENT
Submitted by:- Ashish Chopra (5221), - Siddharth Jain (5219),- Vinit Agarwal (5183),- Keshav Saraf (5214),- Devesh Yadav (7134),- Siddharth Sharma (7282)
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Direct Tax Code, 2009vs.
Income Tax Act, 1961with reference
toCapital Gains
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DifferencesIncome Tax Act, 1961
• Separate treatment for LTCG and STCG
• LTCG from listed equity shares and listed MFs is exempt u/s 10(38) if STT is paid.
• LTCG taxed at 20%.• Base year for indexation
is 1981-82
Direct Tax Code, 2009
• Same treatment for LTCG and STCG*
• STT is proposed to be abolished.
• LTCG to be taxed at normal slab rate
• Base date to be shifted from 1.4.1981 to 1.4.2000
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• Indexation benefit not available for debentures and bonds (Third Proviso to Sec. 48)
• Gain on the transfer of an asset would not be liable to tax if its cost of acquisition is indeterminable.
• Indexation benefit is available on LTCA where the period of holding is more than 3 years subject to certain exceptions u/s 2(42A).
• Indexation benefit will now be available for bonds and debentures also
• Cost of acquisition of asset deemed to be nil if not determinable.
• Indexation benefit available where the period of holding of the asset is more than 1 year.
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Tax rates for an individual
Exemption limit (DTC)-Males : 1,60,000-Females : 1,90,000-Senior Citizen : 2,40,000
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IMPACTOF
DIRECT TAX CODE 2009ON
LONG TERM CAPITAL GAINSFROM
LISTED EQUITY SHARES AND MFs
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Illustration
• Mr. A bought 1,000 listed shares of XYZ Ltd. in September 2003 for Rs 20,000
• Sold them for Rs 3,40,000 in November 2009. • Indexed Cost of Acquisition is Rs. 25,140.• LTCG is Rs. 3,14,860.• Tax Liability under Income Tax Act, 1961 is NIL as it
is exempt u/s 10(38).• Tax Liability under DTC, 2009 is Rs. 15,480 as per
new slab rate of DTC.
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Conclusion
DTC is in no way beneficial for Long term investment in listed equity shares and equity mutual funds.
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IMPACTOF
DIRECT TAX CODE 2009ON
SHORT TERM CAPITAL GAINSFROM
LISTED EQUITY SHARES AND MFs
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Illustration
• Mr. A bought 1,000 listed shares of XYZ Ltd. in September 2009 for Rs 20,000.
• Sold them for Rs 3,40,000 in November 2009. • STCG is Rs. 3,20,000.• As per Income Tax Act, 1961 STCG will be taxed
at 15% (Sec. 111A) amounting to Rs. 48,000• Under DTC- 2009, tax liability is Rs. 16,000 as
per new slab rate of DTC.
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Conclusion
• DTC is beneficial for short term investments in listed equity shares and equity MFs upto Rs. 10,00,000 only.
• Beyond Rs. 10 Lakhs it will be taxed at 20% as per the new slab rate of DTC.
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IMPACTOF
DIRECT TAX CODE 2009ON
CAPITAL GAINSFROM
UNLISTED EQUITY SHARES AND MFs
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Illustration
• Mr. A bought 1,000 unlisted shares of XYZ Ltd. in September 2003 for Rs 20,000.
• Sold them for Rs 3,40,000 in November 2009. • Indexed Cost of Acquisition is Rs. 25,140.• LTCG is Rs. 3,20,000.• As per Income Tax Act, 1961 LTCG will be taxed at
20% amounting to Rs. 64,000.• Under DTC- 2009, tax liability is Rs. 16,000 as per
new slab rate of DTC.
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Conclusion
• DTC is beneficial for Long term investments in unlisted shares and mutual funds upto Rs. 10 Lakhs and shall remain neutral from Rs. 10 Lakhs to Rs. 25 Lakhs.
• Beyond Rs. 25 Lakhs, it is unfavorable as LTCG will be taxed at 30%.