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 Leviedat15percentofthe Taxongrossassets

AlternativeTax adjustedbookprofitsinthe introducedasunder:
caseofthosecompanies - 0.25percentofgross
whereincome-taxpayableon assetsforBanking
thetaxableincomeaccording companies
tothenormalprovisionsofthe - 2percentofgross
Actislesserthanthesame. assetsforother
companies

Dividend
15percent 15percent
DistributionTax

• 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
slumpsaleandconsiderationwithrespecttoatransferofanyself-
generatedbusinessasset

- 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 AsperDTC

ForeignCompany 40percent - 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/FTSearnedbynon-
residentsseemstobedoneawaywith.
• 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
situatedoutsideIndiaorfromanyamountpayablebyanypersontothenon-
resident.
• 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;purchaseoftwo-
third(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 Particularsof Existingrates Ratesproposed

ofdeductee expenditure byDTC

Resident Paymentfornon- Nil 10percent

competefees

Amountreceived Nil1 10percent

asremuneration
orprizefor
renderingany
services
Rentforuseof 2percent 1percent
plantormachinery
orequipment
Paymenttoa 2percent 1percent
Individual/HUF
contractorfor
workscontract

Anyotherincome Nil 10percent

NonResident RoyaltyandFee 10percent 20percent

fortechnical
services
Capitalgains - 40percent,in 30percent
caseofshort
termcapital
gains
- 20percent,in
caseoflong
termcapital
gains
Anyotherincome 40percent 35
(i.e.otherthan
incomeonwhich
specifiedrateis
prescribed)

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/non-
furnishingofcertaindocuments/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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SrNo ClassofAssets
1 Building
2 Vehicles
3 MachineryandPlant
4 Scientificresearchassets
5 Intangibleassets
6 Deferredrevenue
expenditure
Note:Theaboveinformation/detailisaspertheDirectTaxCode2009asreleasedbytheFinanceMinisteron
12August2009(www.finmin.nic.in)
19
Annexure
Key Changes in Depreciation Rates
Depreciationallowanceasa
percentageofWDV
Blockofassets
Existing Proposed
Buildingsusedas,orforhotelsorboardinghouses,railwaystation, 10 15
airport,seaportorbusterminal
Buildingsacquiredonorafterthe1stdayofSeptember,2002for 100 10
installingmachineryandplantformingpartofwatersupplyprojector
watertreatmentsystemandwhichisputtouseforthepurposeof
businessofprovidinginfrastructurefacilitiesunderclause(i)ofSection
80-IA(4)
Commercialvehiclesforthepurposeofbusinessorprofession- 40/50/60 15
dependingonthedateofacquisitionandputtouse
• Returnablepackagesusedinfieldoperations(aboveground) 15 60
distributionbypetroleumornaturalgasconcerns
• Plantusedinfieldoperations(belowground)bypetroleumornatural
gasconcerns
Machineryandplant,acquiredandinstalledonorafterthe1stdayof 100 15
September,2002inawatersupplyprojectorawatertreatment
systemandwhichisputtouseforthepurposeofbusinessof
providinginfrastructurefacilityunderclause(i)ofSection80-IA(4)
Allassets,otherthanland,usedforscientificresearch - 100
Prescribedpreliminaryexpensesincurredbeforethecommencement - 25
ofbusinessorinconnectionwithextensionofbusinessorin
connectionwiththesettingupofnewbusiness
Assetorprojectconstructed,erectedorsetupbytheassesseeif, - 20
benefitoradvantagearisestotheassesseeoverafixedperiodnot
exceedingtenyears;andassetisnotownedbytheassessee
Assetorprojectconstructed,erectedorsetupbytheassesseeif, - 15
benefitoradvantagearisestotheassesseeoverafixedperiod
exceedingtenyears;andassetisnotownedbytheassessee
• Non-competefee - 25
• Premiumforobtaininganyassetonleaseorrent
• Voluntaryretirementpaymentmadeinaccordancewithanyscheme 25
ofvoluntaryretirement
• ExpenditureincurredbyanIndiancompanywhollyandexclusively 25
forthepurposesofbusinessreorganisation
• ExpenditureincurredbyapersonresidentinIndiawhollyand 15
exclusivelyonanyoperationsrelatingtoprospectingforanymineral
orthedevelopmentofamineorothernaturaldepositofany
mineral,totheextentprescribed
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmember
firmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
 in.kpmg.com

KPMG in India Key Contacts

Mumbai Hyderabad Pradip Kanakia
KPMG House, Kamala Mills Compound 8-2-618/2 Executive Director
448, Senapati Bapat Marg Reliance Humsafar, 4th Floor Head - Markets
Lower Parel Road No.11, Banjara Hills pkanakia@kpmg.com
Mumbai 400 013 Hyderabad - 500 034 +91 80 3980 6100
Tel: +91 22 3989 6000 Tel: +91 40 6630 5000
Uday Ved
Fax: +91 22 3983 6000 Fax: +91 40 6630 5299
Executive Director
Head – Tax
Delhi Kolkata uved@kpmg.com
DLF Building No. 10, Infinity Benchmark, Plot No. G-1 +91 22 3983 5933
8th Floor, Tower B, 10th Floor, Block – EP & GP, Sector V
DLF Cyber City, Phase 2, Gurgaon 122 002 Salt Lake City, Kolkata 700 091
Tel: +91 124 307 4000 Tel: +91 33 44034000
Fax: +91 124 254 9101 Fax: +91 33 44034199

Bangalore Pune
Solitaire 703, Godrej Castlemaine
139/26, 3rd Floor, Bund Garden
Inner Ring Road, Koramangala, Pune 411 001
Bangalore 560 071 Tel: +91 20 305 85764/65
Tel: +91 80 3980 6000 Fax: +91 20 305 85775
Fax: +91 80 3980 6999
Kochi
Chennai 4/F, Palal Towers
No.10 Mahatma Gandhi Road M. G. Road, Ravipuram,
Nungambakkam Kochi 682 016
Chennai 600 034 Tel: +91 484 309 4120
Fax: +91 484 309 4121
Tel: +91 44 3914 5000
Fax: +91 44 3914 5999

©2009KPMG,anIndianPartnershipandamemberfirm
Theinformationcontainedhereinisofageneralnatureandisnotintendedtoaddressthecircumstancesofanyparticularindividual oftheKPMGnetworkofindependentmemberfirms
orentity.Althoughweendeavourtoprovideaccurateandtimelyinformation,therecanbenoguaranteethatsuchinformationis affiliatedwithKPMGInternational,aSwisscooperative.
accurateasofthedateitisreceivedorthatitwillcontinuetobeaccurateinthefuture.Nooneshouldactonsuchinformation Allrightsreserved.
withoutappropriateprofessionaladviceafterathoroughexaminationoftheparticularsituation. KPMGandtheKPMGlogoareregisteredtrademarksof
KPMGInternational,aSwisscooperative.