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Direct Tax Code (DTC)

A brief of the content of the Direct Tax Code is as follows:

9 

THE DIRECT TAXES CODE, 2010
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ARRANGEMENT OF CLAUSES
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CHAPTER I
PRELIMINARY CLAUSES
1. Short title, extent and commencement.

PART A
INCOME-TAX

CHAPTER II
BASIS OF CHARGE
2. Liability to pay, and charge of, income-tax.
3. Scope of total income.
4. Residence in India.
5. Income deemed to accrue in India.
6. Income deemed to be received in the financial year.
7. Dividend income.
8. Total income to include income of any other person.
9. Income of individual to include income of spouse, minor child and others.
10. Income not included in the total income.
11. Persons, entity or funds not liable to income-tax.

CHAPTER III
COMPUTATION OF TOTAL INCOME

I.—GENERAL
12. Computation of total income.
13. Classification of sources of income.
14. Computation of income from ordinary sources.
15 Computation of income from special sources.
16. Apportionment of income between spouses governed by Portuguese Civil Code.
17. Avoidance of double taxation.
18. Expenditure not to be allowed as deduction.
19. Amount not deductible where tax is not deducted at source.

II.—HEADS OF INCOME
A.—Income from employment
20. Income from employment.
21. Computation of income from employment.
22. Scope of gross salary.
23. Deductions from gross salary.
B.—Income from house property
24. Income from house property.
25. Computation of income from house property.
26. Scope of gross rent.
27. Deductions from gross rent.

28. Provision for advance rent received.
29. Provision for arrears of rent received.


C.—Income from business
30. Income from business.
31. Business when treated distinct and separate.
32. Computation of income from business.
33. Gross earnings.
34. Determination of business expenditure.
35. Determination of operating expenditure.
36. Determination of finance charges.
37. Determination of capital allowances.
38. Determination of depreciation.
39. Determination of initial depreciation.
40. Determination of terminal allowance.
41. Deduction for scientific research and development allowance.
42. Computation of profit on transfer of a business capital asset.
43. Special provisions relating to business reorganisation.
44. Meaning of actual cost.
45. Meaning of written down value and adjusted value of assets.

D.—Capital gains
46. Capital gains.
47. Income from certain transfers not to be treated as capital gains.
48. Financial year of taxability.
49. Computation of income from transfer of any investment asset.
50. Full value of consideration.
51. Deduction for cost of acquisition.
52. Indexed cost of acquisition or improvement.
53. Cost of acquisition of an investment asset.
54. Cost of improvement of an investment asset.
55. Relief for rollover of investment asset.

E.—Income from residuary sources
56. Income from residuary sources.
57. Computation of income from residuary sources.
58. Gross residuary income.
59. Deductions from gross residuary income.

 

III.—AGGREGATION OF INCOME
60. Aggregation of income under a head of income.
61. Aggregation of income from ordinary sources.
62. Aggregation of income from special sources.
63. Determination of total income.

Special provisions relating to business reorganisation or conversion of a company into a limited liability partnership.
65. Aggregation of losses in case of change in constitution of unincorporated body.
66. Aggregation of losses in the case of certain companies.
67. Aggregation of loss not to be allowed in the case of filing of return after due date.


IV.—TAX INCENTIVES
68. Deductions from gross total income from ordinary sources.
69. Deduction for savings.
70. Deduction for life insurance.
71. Deduction for health insurance.
72. Deduction for education of children.
73. Limit on deductions under sections 70, 71 and 72.
74. Deduction of interest on loan taken for house property.
75. Deduction of interest on loan taken for higher education.
76. Deduction for medical treatment.
77. Deduction to a person with disability.
78. Deduction for medical treatment and maintenance of a dependant person with
disability.
79. Deduction of contribution or donations to certain funds or non-profit organisations.
80. Deduction for rent paid.
81. Deduction for political contributions.
82. Deduction of income of Investor Protection Fund.
83. Deduction of royalty income of authors.
84. Deduction of royalty on patents.
85. Deduction of income of co-operative society from banking activities.
86. Deduction of income of primary co-operative societies.

V.—MAINTENANCE OF ACCOUNTS AND OTHER RELATED MATTERS
87. Maintenance of accounts.
88. Audit of accounts and reporting of international transaction.
89. Method of accounting.

CHAPTER IV
SPECIAL PROVISIONS RELATING TO THE COMPUTATION OF TOTAL INCOME OF NON-PROFIT ORGANISATIONS
90. Applicability of this Chapter.
91. Total income of a non-profit organisation.
92. Computation of total income of a non-profit organisation.
93. Gross receipts of a non-profit organisation.
94. Outgoings of a non-profit organisation.
95. Modes of investment.
96. Deemed income of a non-profit organisation.
97. Use or application of funds or assets for the benefit of interested person.
98. Registration of a non-profit organisation.
99. Maintenance of accounts and tax audit.
100. Anonymous donations.
101. Consequences of conversion of a non-profit organisation.
102. Provisions of this Chapter not to apply in certain cases.
103. Interpretations in this chapter.

CHAPTER V
COMPUTATION OF BOOK PROFIT
104. Computation of book profit.
105. Preparation of profit and loss account for computing book profit.
106. Tax credit for tax paid on book profit.
107. Application of other provisions of this Code.


CHAPTER VI
PROVISIONS REATING TO TAX ON INCOME RECEIVED FROM VENTURE CAPITAL COMPANY AND VENTURE CAPITAL FUND
108. Tax on income received from venture capital company and venture capital fund.

PART B
DIVIDEND DISTRIBUTUION TAX

CHAPTER VII
SPECIAL PROVISIONS RELATING TO TAX ON DISTRIBUTED PROFITS OF DOMESTICE COMPANIES
109. Tax on distributed profits of domestic companies.

PART C
TAX ON DISTRIBUTED INCOME

CHAPTER VIII
SPECIAL PROVISIONS RELATING TO TAX ON DISTRIBUTED INCOME
110. Tax on income distributed by mutual fund or life insurer.

PART D
BRANCH PROFITS TAX

CHAPTER IX

CHARGE OF BRANCH PROFITS TAX

111. Tax on branch profits

 

PART E
WEALTH-TAX

CHAPTER X
CHARGE OF WEALTH TAX
112. Tax on net wealth.
113. Computation of net wealth.
114. Net wealth to include certain assets.

 

PART F

PREVENTION OF ABUSE OF THE CODE

 

CHAPTER XI 

SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX

115. Disallowance of expenditure having regard to fair market value.
116. Determination of income from international transaction having regard to arm’s
length price.
117. Determination of arm’s length price.
118. Advance pricing agreement.
119. Avoidance of income-tax by transactions resulting in transfer of income to nonresidents.
120. Avoidance of tax by sale and buy-back transaction in security.
121. Avoidance of tax by buy and sale-back transaction in security.
122. Broken period income accruing from a debt instrument.
123. General anti-avoidance rule.
124. Interpretations in this chapter.
125. Presumption of purpose.

PART G
TAX MANAGMENT

CHAPTER XII
TAX ADMINISTRATION AND PROCEDURE
A.—TAX ADMINISTRATION
126. Income-tax authorities.
127. Appointment and control of income-tax authorities.
128. Power of higher authorities.
129. Powers of Board to issue instructions.
130. Jurisdiction of income-tax authorities.
131. Jurisdiction of Assessing Officers.
132. Power to transfer cases.
133. Change of incumbent.
134. Powers regarding discovery and production of evidence.
135. Search and seizure.
136. Power to requisition material taken into custody.
137. Retention and release of books of account or documents seized or requisitioned.
138. Delivery of material belonging to other persons.
139. Retention and application of seized or requisitioned assets.
140. Power to call for information.
141. Power of survey.
142. Power to disclose information in respect of assessee.
143. Proceedings before income-tax authorities to be judicial proceedings.


B.—ASSESSMENT PROCEDURE
144. Self-reporting of tax bases.
145. Tax return preparer.
146. Issue of notice to furnish return.
147. Self-assessment tax.
148. Acknowledgment of return.
149 Processing of return.
150. Notice for inquiry before assessment.
151. Special audit.
152. Determination of value of assets.
153. Determination of arm’s length price.
154. Determination of an impermissible avoidance agreement and consequences thereof.
155. Assessment.
156. Best judgment assessment.
157. Directions by Joint Commissioner for assessment.
158. Direction by Dispute Resolution Panel for assessment.
159. Reopening of assessment.
160. Approval for search assessment.
161. Rectification of mistake.
162. Notice of demand.
163. Time limits for completion of assessment or re-assessments.

C.—PROCEDURE FOR ASSESSMENT IN SPECIAL CASES
164. Representative assessee.
165. Rights and obligations of a representative assessee.
166. Direct assessment or recovery not barred.
167. Remedy against property in case of representative assessee.
168. Assessment upon business reorgainsation.
169. Assessment after partition of a Hindu undivided family.
170. Assessment of non-resident in respect of occasional shipping business.
171. Assessment of persons leaving India.
172. Assessment of an unincorporated body formed for a particular event or purpose.
173. Assessment of persons likely to transfer property to avoid tax.
174. Discontinued business.
175. Assessment of unincorporated body in case of change in its constitution.
176. Assessment on retirement or death of participant.
177. Assessment of a deductor or collector.
D.— APPEALS AND REVISION
178. Appeal to Commissioner (Appeals).
179. Form of appeal and limitation.
180. Procedure in appeal.
181. Powers of Commissioner (Appeals).
182. Appellate Tribunal.
183. Appeals to Appellate Tribunal.
184. Stay of demand by Appellate Tribunal.
185. Orders of Appellate Tribunal.
186. Constitution of Benches and procedure of Appellate Tribunal.
187. Appeal to High Court.
188. Case before High Court to be heard by not less than two Judges.
189. Appeal to Supreme Court.
190. Hearing before Supreme Court.
191. Revision of orders prejudicial to revenue.
192. Revision of other orders.
CHAPTER XIII
COLLECTION AND RECOVERY OF TAX
A.— DEDUCTION OF TAX AT SOURCE
193. Deduction or collection of tax at source and advance payment.
194. Direct payment.
195. Liability to deduct tax at source.
196. Payment of income and deduction of tax.
197. Certificate for lower or no deduction of tax.
198. Obligation of deductor.
199. Reporting of payments without deduction of tax.
200. No deduction of tax in certain cases.
201. Credit for tax deducted.
B.—COLLECTION OF TAX AT SOURCE
202. Tax collection at source.
203. Credit for tax collected.
204. Interpretations under Sub-Chapters A and B.
C.—ADVANCE TAX
205. Liability to pay advance tax.
D.— TAX CREDIT FOR RELIEF IN RESPECT OF ARREARS OR ADVANCE RECEIPTS
206. Tax relief for arrears of advance receipts.
E.—FOREIGN TAX CREDIT
207. Foreign tax credit.
F.—PAYMENT OF WEALTH-TAX
208. Payment of wealth-tax.
G.—INTEREST PAYABLE TO THE CENTRAL GOVERNMENT
209. Interest for default in furnishing return of tax bases.
210. Interest for default in payment of advance income-tax.
211. Interest for deferment of advance income-tax.
212. Interest on excess refund.
213. Interest payable on demand raised.
214. Interest for failure to deduct or collect or pay tax.
H.—REFUNDS
215. Refunds.
216. Interest on refund.
217. Person entitled to claim refund in certain special cases.
I.—RECOVERY
218. Recovery by Assessing Officer.
219. Recovery by Tax Recovery Officer.
220. Modes of recovery.
221. Tax Recovery Officer by whom recovery is to be effected.
222. Recovery of tax arrear in respect of non-resident from his assets.
223. Recovery in case of a company in liquidation.
224. Liability of manager of a company.
225. Joint and several liability of participants.
226. Recovery through State Government.
227. Recovery of tax in pursuance of agreements with foreign countries or specified
territory.
228. Tax clearance certificate in certain cases.
229. Recovery by suit or under other law not affected.
CHAPTER XIV
PENALTIES
230. Penalty for underreporting of tax bases.
231. Penalty where search has been initiated.
232. Penalty for other defaults.
233. Procedure.
234. Bar of limitation for imposing penalty.
CHAPTER XV
PROSECUTION
235. Chapter not in derogation of any other law.
236. Contravention of any restraint order.
237. Failure to comply with the provisions of clause (d) of sub-section (2) of section 135.
238. Removal, concealment, transfer or delivery of property to thwart tax recovery.
239. Failure to comply with provisions of sub-sections (1) and (3) of section 223.
240. Failure to pay tax deducted or collected at source or to pay dividend or income distribution tax.
241. Wilful attempt to evade tax.
242. Failure to furnish returns of tax bases.
243. Failure to furnish statements and reports.
244. Failure to comply with direction under this Code.
245. False statement in verification.
246. Falsification of books of account or documents.
247. Abetment of false return.
248. Offences by companies, etc.
249. Proof of entries in records or documents.
250. Presumption as to assets and books of account in certain cases.
251. Presumption as to culpable mental state.
252. Prosecution to be instance of Chief Commissioner or Commissioner.
253. Punishment for second and subsequent offences.
254. Offences to be non-cognizable.
255. Disclosure of information by public servants.
CHAPTER XVI
ADVANCE RULINGS AND DISPUTE RESOULTION
256. Scope of ruling and dispute resolution.
257. Authority for Advance Rulings and Dispute Resolution.
258. Procedure for advance ruling.
259. Income-tax authority or Appellate Tribunal not to proceed in certain cases.
260. Applicability of advance ruling.
261. Advance Ruling to be void in certain circumstances.
262. Procedure for dispute resolution.
263. Stay of demand by the Authority.
264. Power to rectify a mistake.
265. Powers of Authority.
266. Procedure of Authority.
267. Interpretations in this Chapter.
CHAPTER XVII
SETTLEMENT OF CASES
268. Income-tax Settlement Commission.
269. Jurisdiction and powers of Settlement Commission.
270. Vice-Chairperson to act as Chairperson.
271. Power of Chairperson to transfer cases from one Bench to another.
272. Decision to be by majority.
273. Application for settlement of cases.
274. Additional amount of income-tax.
275. Admission of application.
276. Further inquiry into the case.
277. Order of settlement.
278. Payment of tax on settlement.
279. Power of Settlement Commission to order provisional attachment to protect revenue.
280. Revival of proceedings before Assessing Officer.
281. Powers of Settlement Commission after admission.
282. Inspection and furnishing of reports.
283. Power of Settlement Commission to grant immunity.
284. Abatement of proceedings before Settlement Commission.
285. Credit for tax paid in case of abatement of proceedings.
286. Recovery of sums due under order of settlement.
287. Order of settlement to be conclusive.
288. Bar on subsequent application.
289. Proceedings to be judicial proceedings.
290. Interpretations in this Chapter.
PART H
GENERAL
CHAPTER XVII
291. Agreement with foreign countries or specified territory.
292. Permanent account number.
293. Tax account number.
294. Mode of acceptance or repayment of certain loans or deposits.
295. Obligation to furnish annual information return.
296. Certain transfers to be void.
297. Provisional attachment to protect revenue in certain cases.
298. Service of notice generally.
299. Authentications of notices and other documents.
300. Notice deemed to be valid in certain circumstances.
301. Service of notice when family is disrupted or unincorporated body is dissolved.
302. Publication of information respecting assessees in certain cases.
303. Appearance by registered valuer in certain matters.
304. Appearance by authorised representative.
305. Rounding off of tax bases and tax.
306. Indemnity.
307. Power to tender immunity from prosecution.
308. Cognizance of offences.
309. Section 360 of the Code of Criminal Procedure, 1973, and the Probation of Offenders
Act, 1958, not to apply.
310. Return of tax bases not to be invalid on certain grounds.
311. Presumption as to material fund.
312. Bar of suits in civil courts.
313. Power to resind.
PART I
INTERPRETATIONS AND MISCELLANEOUS PROVISIONS
CHAPTER XVI
INTERPRETATIONS AND CONSTRUCTIONS
314. Interpretations in this Code.
315. Construction.
CHAPTER XX
MISCELLANEOUS
316. Power to make rules.
317. Laying of rules, schemes and notifications before Parliament.
318. Repeal and savings.
319. Power to remove difficulties.
THE FIRST SCHEDULE.
THE SECOND SCHEDULE.
THE THIRD SCHEDULE.
THE FOURTH SCHEDULE.
THE FIFTH SCHEDULE.
THE SIXTH SCHEDULE.
THE SEVENTH SCHEDULE.
THE EIGHTH SCHEDULE.
THE NINTH SCHEDULE.
THE TENTH SCHEDULE.
THE ELEVENTH SCHEDULE.
THE TWELFTH SCHEDULE.
THE THIRTEENTH SCHEDULE.
THE FOURTEENTH SCHEDULE.
THE FIFTEENTH SCHEDULE.
THE SIXTEENTH SCHEDULE.
THE SEVENTEENTH SCHEDULE.
THE EIGHTEENTH SCHEDULE.
THE NINETEENTH SCHEDULE.
THE TWENTIETH SCHEDULE.
THE TWENTY-FIRST SCHEDULE.
THE TWENTY-SECOND SCHEDULE.

 

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