New Direct Tax Code DTC
India's Direct Tax Code (DTC) 2025 is set to replace the existing Income Tax Act of 1961 with a more simplified and modern tax structure. The primary aim of the DTC is to make tax laws easier for the general public to understand and comply with. It eliminates complex terminologies like "Resident but Not Ordinarily Resident" and does away with the distinction between Previous Year and Assessment Year, instead focusing solely on the Financial Year. Additionally, it introduces a simplified approach for capital gains taxation and changes to how dividends are taxed. Some exemptions, such as those for certain life insurance products, will now be taxable, and the tax audit process will allow for more professionals, including Cost Accountants, to participate?
The DTC also targets expanding the tax base by bringing more individuals and entities into the fold, with the government's goal to increase the number of taxpayers significantly. By reducing exemptions and deductions, it seeks to streamline the filing process while increasing compliance. A notable feature is the introduction of a higher tax rate for ultra-rich individuals earning over ?10 crore annually. The DTC also aligns India’s tax system with international standards, promoting transparency and efficiency, and potentially attracting more foreign investment. Although it promises a simpler and more efficient system, the DTC's full impact will unfold as it is implemented in 2025.
By CA L.Muralidharan and CPA L.Mukundan
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