Decoding - Direct Tax Code (DTC) of India

Today DTC has been placed in parliament. Last week it was approved by cabinet. The surprises:

Positive:
1. No long term capital gain tax if STT is paid (positive from its last draft as there is no long term capital gain tax now also).
2. STT remains for equity transactions.
3. Short term capital gains will taxed at 50% rate of one's tax bracket. So instead of 15% direct taxation, short term capital gain tax will be levied at 5%, 10% or 15%.
4. Mutual Funds and ULIPs have to pay dividend distribution tax of 5%.

Negative:

1. DTC is effective from 1st April, 2012 instead of 1st April, 2011. God knows why it has been tabled so early. Hope it does not go through ever changing drafts from here on (but no complaint if negatives are neutralized in n number of drafts)
2. DTC is way bulkier than it was originally thought of. One of the basic reasons of bringing DTC is to make tax in India simpler.
3. No tax exemption if you invest in ELSS (equity linked tax savings) mutual funds or ULIP.

Other facts:

1. Man and woman will have same tax slabs - that is no tax till taxable income of Rs 2L, 10% tax between Rs. 2L to 5L and 20% between Rs. 5L to 10L, and 30% above 10L (L = Lakh = 100,000, Rs. = INR = Indian National Rupee). For senior citizens first no tax needs to be paid till income of Rs. 2.5L in a year.
2. Corporate tax is now 30% instead of 33.22%. Foreign companies now pay 40% tax, it'll be same as their Indian counterparts and will be at 30%.
3. DTC also proposed to increase the minimum alternate tax (MAT) rate of companies to 20% of book profit from the current 18%. However, under the current Income Tax Act, adding up the surcharge and cess would take the current MAT to 19.93 per cent.
4. Home loan interest exemption (Rs. 1.5L) stays, list of 80C (Rs 1L) exemptions is now very limited and there can be further Rs 50K exemption for some insurance and other products.