Normal Tax rates on Capital Gain:Under the proposed DTC(Direct tax code), any gains arising from investment assets were liable to be taxed as capital gains at the rate of 30% in case of non-residents and at the applicable marginal rates in case of residents. In the RDP(revised discussion paper on DTC), the capital gains would be taxable at normal rates applicable to the taxpayer, including non-residents.
Standard deduction in % on sale of Long term equity or equity funds :FundsListed equity shares or units of equity-oriented funds, held for more than a year, would be taxed after al owing a certain prescribed percentage of capital gains as notional deduction. Losses, too would be scaled down. The main object of
the computation of adjusted capital gains is to benefit the lower and middle income group taxpayers, as the effective tax rate would be lesser in case of taxpayers fal ing under the lower tax rate. The specified rate of deduction has not been notified but a rate of 50-70% of capital gains has been indicated.
A transition regime is proposed in case of capital gains on listed securities, which are exempt under the ITL and would be taxable under the DTC.
Indexation benefit for other Capital assets :Indexation benefit would be allowed for other capital assets
Capital gain Index base shifted to 01.04.2000:Unrealized gains up to the tax year 1999-00 would not be taxed.
Rollover exemption benefit withdrawn.:Rollover exemption benefit introduced by the DTC, through Capital Gains Savings Scheme proposal has been withdrawn.
STT(securities transaction tax ) stays:The proposal of abolition of Securities Transaction Tax (STT) by the DTC has been withdrawn. STT would now be payable on specified transactions, which would be determined, based on the taxation regime of capital gains and flow of funds to the capital market.
These are proposal for new direct tax code and revised discussion paper has recently issued on DTC ,further application of direct tax code is proposed from FY 11-12 but it is not certain.