Investments Under The Taxman’s Scanner and Direct Tax Code Draft
Direct Tax Code Draft
• Std. Deduction from Gross Income from house property to be reduced from 30 to 20%
• No distinction between short term and long capital gains. All capital gains to be taxed at normal rates.
• 2000 to be base year for indexation in case of capital gains.
• Security Transaction Tax to be abolished.
• Exemptions u/s 54 etc. from capital gains to be abolished.
• Limit of turnover for presumptive taxation to be raised to 1 cr.
• Law to be made stricter for defaulters & non-filers.
A Capital Gain Shocker
- Sources of income to have following names.
A.Income from Employment
B.Income from house property
C.Income from business
E.Income from residuary sources.
- Moving on, capital losses are to be ring-fenced under the DTC. * This means capital losses will be allowed to be set-off only against capital gains. The unabsorbed capital loss can be carried forward for future set-off for any number of years as against a maximum period of eight years under ITA61.
- Coming to deductions from capital gains, the current deduction under section 54EC, where the capital gain amount may be invested in bonds for claiming tax exemptions stands cancelled under the DTC.
- 10 Investments under the Taxman’s scanner
• Unsecured loans above Rs.25 lakh.
• Loss shown from house property above 2.5lakh.
• If investments in property more than 5 times of gross income.
• Sum of short term and long term capital gain is over Rs.25 lakh
• Sale of property shown in AIR but capital gains not declared.
• Commissions paid in excess of Rs.10lakh.
• Realty business with gross turnover exceeding Rs.5 cr.
• Hotel and tour operations with gross turnover of Rs.5 crore but profit shown is less than 0.05%.
• Depreciation claims in excess of Rs.25lakh
• Net agricultural income more than Rs.10lakh.