The
salient features
of the
code are
as follows:
(i) It consolidates and integrates all direct tax laws and replaces both the Income
Tax
Act,
1961 and
the
Wealth
Tax
Act,
1957
by a single
legislation.
(ii) It simplifies
the language
of the legislation.
The
use of
direct,
active
speech, expressing
only
a
single point
through one sub-section
and
rearranging the provisions into a rational structure will assist a lay person to understand the provisions of the Direct Taxes
Code (DTC).
(iii) It indicates stability in direct tax rates. Currently, the rates of tax for a
particular year are stipulated in the Finance Act for that relevant year.
Therefore, even if there is no change proposed in the rates of tax, the
Finance Bill has still to be passed indicating the same rates of tax. Under
the
Code, all rates of taxes are proposed to be prescribed in Schedules to the Code, thereby obviating the need for
annual finance bill, if
no
change in the tax rate is proposed.
(iv) One of the key aims of tax code is to provide a system which takes into account increased cross border
mergers and acquisition
by Indian
corporates.
(v) It is also expected to streamline tax rates and administration for foreign
institutional investors.
(vi) It strengthens taxation provisions for international transactions.
This has been reflected in the new provisions. The salient new provisions with regard to international taxation are :
(a) Introduction
of Advance Pricing
Agreements
for
International
Transactions
(b) Alignment of concept of residence (of a Company) with India‘s tax treaties by introduction of concept of ―place of effective management‖ instead of ―wholly controlled in India.
(c) Controlled Foreign Company Regulations
(d) Introduction of Branch Profit Tax on foreign companies in lieu of higher
rate of taxation.
(e) Introduction
of General Anti
Avoidance
Rule
(GAAR) to curb
aggressive tax planning.
(vii) Rationalizing exemptions.
(viii) Replace profit
linked tax incentives with investment linked incentive
(ix) Simplification of Appellate Procedure for Public Sector Undertakings
(ix) Simplification of Appellate Procedure for Public Sector Undertakings
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