Direct Tax Code - Highlights

- KPMG

Foreword

The DTC Bill, 2010 introduced in the Parliament is proposed to be made effective from 1 April 2012.

While some onerous provisions from the first draft of the DTC have been rightly dropped after representations, several proposals in the DTC are still likely to compel the corporates to regit their existing structures. For example, the DTC proposes to tax transfer of shares of a foreign company, on the basis that there is a transfer of a capital asset situated in India, if the fair value of the assets situated in India constitute at least 50 per cent of the assets directly or indirectly held by the foreign company. Further, an overseas company with a place of effective management in India will now be treated as a tax resident in India and would be consequently liable to tax in India on its global income. Introduction of CFC rules would result in taxing income of certain overseas subsidiaries in the hands of their Indian owners, even before such income is distributed.

Other provisions of interest to India Inc. relate to APA and the GAAR. The former is a very welcome step and will go a long way in minimising the transfer pricing disputes. However, the wide-sweep of the GAAR has been retained, despite representations. One hopes that it will be applied judiciously.

Another key provision deals with the continuation of tax holidays to units in SEZs. The Bill provides that units in SEZs that commence operations on or before 31 March 2014 are to be entitled to a grandfathering of profit-linked tax deductions. However, units in SEZs will not be exempt from MAT, a move that dampens the attractiveness of SEZs.

The long-term capital gains on sale of listed shares continue to be tax exempt and short-term capital gains on the sale of such shares will be taxed at half the applicable rates. Gains on sale of other assets (including unlisted shares) are to be taxed fully, subject to indexation benefits.

Overall, the calibration of tax rates, which was hinted at in the revised discussion paper has been carried through with the Corporate tax rate proposed at 30 per cent instead of the earlier rate of 25 per cent and individual tax slabs being less generous as compared to those which had earlier raised euphoric hopes of low personal taxation in India.

India Inc. has long advocated its preference for a modern, stable and simple tax regime. Whether the DTC meets these criteria is something that will be undoubtedly debated as one analyses the fine print. However, it is the implementation that will determine the long-term impact of the new tax regime.

General provisions

The concept of previous year replaced with a new concept of financial year, which inter alia means a period of 12 months commencing from the 1st day of April.

Income has been classified into two broad groups, viz.:

Income from Ordinary Sources, including –

-   Income from employment

-   Income from house property

-   Income from business

-   Capital gains

-   Income from residuary sources;

Income from Special Sources has been proposed to include specified income of non-residents, winning from lotteries, horse races, etc. However, if such income is attributable to the PE of the non-resident, it would not be considered as Special Source income. Accordingly, such income would be liable to tax on net income basis.

Losses arising from Ordinary Sources to be eligible for set-off or carry forward and set-off against income only from ordinary sources without any time limit. Similar treatment would apply for set off and carry forward of losses from Special Sources. Loss arising from speculative business, losses under the head capital gains, and losses from the activity of owning and maintaining horse race to be set off only against such income in the same or succeeding financial years.

In case of delayed filing of return of income for any particular year, only losses pertaining to that year would now not be allowed to be carried forward for set-off in future years.

Corporate tax

▪	Under the first draft of the DTC, it was proposed that a company shall pay tax on its gross assets at the rate of 2 per cent (0.25 per cent in case of banking companies) if the tax liability under provisions of the DTC is less than the tax on gross assets. The revised draft of the DTC reintroduces profit-based MAT. The rate has been increased from 18 to 20 per cent.
▪	Computation of book profits broadly similar to that under the Act.
▪	DTC does not specifically provide for credit of MAT paid under the Act.

 

Corporate Tax rates
Category	Existing rate	As per DTC
Income Tax Indian Company	30 per cent	30 per cent
MAT	Levied at 18 per cent of the adjusted book profits in case of companies where income tax payable on taxable income according to the normal provisions of the Act is lower than the tax @ 18 per cent on book profits	Levied at 20 per cent of the adjusted book profits in case of companies where income tax payable on taxable income according to normal provisions of the DTC is lower than the tax @ 20 per cent on book profits
Dividend Distribution Tax	15 percent	15 percent
Income distributed by mutual fund to unit holders of equity-oriented funds	Not applicable	5 per cent of income distributed
Income distributed by life insurance companies to policy holders of equity-oriented life insurance schemes	Not applicable	5 per cent of income distributed

▪	Deduction for DOT paid by subsidiary available against the DOT liability of the holding company.
▪	MAT now applicable to SEZ developers and SEZ units.
▪	SEZ developers now subject to DOT similar to SEZ units.
▪	Security Transaction Tax to continue.
Business income
▪	Income of distinct and separate businesses i.e. where there is no inter-lacing and interdependence of business as stipulated is to be computed separately.

 

▪ Income determined on a presumptive basis
SI. No.	Nature of business	DTC 2009	DTC 2010
1.	Business of providing services or facilities in connection with the prospecting for, or extraction or production of, mineral oil or natural gas	10 percent	14 percent
2.	Business of supplying plant and machinery on hire used or to be used in the prospecting for or extraction or production of, mineral oil or natural gas	10 percent	14 percent
3.	Business of operation of ships (including an arrangement such as slot charter, space charter or joint charter)	7.5 per cent	10 percent
4.	Business of operation of aircraft (including an arrangement such as slot charter, space charter or joint charter)	5 per cent	7 per cent
5.	Any business (other than a profession and business of plying & hiring of goods)	8 per cent	8 per cent*
* applicable only to individuals, Hindu undivided families or firms excluding limited liability partnerships
The amount of income determined above shall be further increased by the excess of the amount of income actually earned from the business over the amount specified above.

 
Income

▪	The ambit of business income has been widened to cover:
	-	Profit on transfer, demolition, destruction or discardment of any business capital asset
	-	Consideration accrued or received with respect to any self generated capital asset
	-	The remission or cessation of any liability by way of loan, deposit, advance or trade credit
	-	Any amount accrued or received, whether as an advance, security deposit or otherwise, from long-term lease of assets (not less than 12 years or agreements which provide for extension(s) of the lease term for not less than 12 years)
	-	Consideration accrued or received on transfer of carbon credits.
Depreciation Rates
▪	Depreciation rates as proposed in 2009 DTC have been retained in the DTC 2010.
General Anti-Avoidance Rules
▪	The DTC contains GAAR provisions, which provide sweeping powers to the tax authorities. The same are applicable to domestic as well as international arrangements.
▪	GAAR provisions empower the CIT to declare any arrangement as “impermissible avoidance arrangement” provided the same has been entered into with the objective of obtaining tax benefit and satisfies any one of the following conditions:
	-	It is not at arm's length
	-	It represents misuse or abuse of the provisions of the DTC
	-	It lacks commercial substance
	-	It is carried out in a manner not normally employed for bona fide business purposes.
▪	An arrangement would be presumed to be for obtaining tax benefit unless the taxpayer demonstrates that obtaining tax benefit was not the main objective of the arrangement.
▪	CIT to determine the tax consequences on invoking GAAR by reallocating the income or disregarding/re-characterising the arrangement.
▪	Meaning of 'tax benefit' widened to include any reduction in the tax base including increase in loss.
▪	GAAR provisions to be applicable as per the guidelines to be framed by the Central Government.
▪	GAAR to override Tax Treaty provisions.
▪	Forum of DRP available in a scenario where GAAR is invoked.
Tax incentives
▪	The DTC substitutes profit-linked incentives with investment based incentives wherein capital expenditure incurred for specified businesses will be allowed as a deductible expenditure. However, certain profit-linked tax incentives under the Act are grandfathered in the DTC.
▪	The investment-linked incentives will apply to the following businesses:
	-	Generation, transmission or distribution of power
	-	Developing or operating and maintaining any infrastructure facility
	-	Operating and maintaining a hospital in a specified area
	-	Processing, preservation and packaging of fruits and vegetables
	-	Laying and operating of a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of the network
	-	Setting up and operating a cold chain facility
	-	Setting up and operating a warehousing facility for the storage of agricultural produce
	-	Exploration and production of mineral or natural gas
	-	SEZ Developers and units established in SEZ
	-	Building and operating a new hotel of two-star or above category commencing operations on or after 1 April 2010
	-	Building and operating a new hospital with at least 100 beds commencing operations on or after 1 April 2010
	-	Developing and building a housing project under slum redevelopment or rehabilitation scheme commencing operations on or after 1 April 2010.
Special Economic Zones
▪	SEZ Developers and even units established in SEZ engaged in the business of manufacture or production of article or things or providing of services would be eligible for tax incentives.
▪	Grandfathering of profit-linked incentives under the Act to continue for SEZ developers notified on or before 31 March 2012. In case of SEZ units, grandfathering extended for units commencing operations on or before 31 March 2014.
▪	Eligible expenditure for investment based tax incentive not to include:
	-	Expenditure on purchase, lease or rental of land or land rights
	-	Negative profit for any financial year preceding the relevant financial year.
Capital Gains
▪	Definition of 'capital assets' has been replaced with the term 'Investment Asset'. Investment Asset does not include business assets like self generated assets, right to manufacture and other capital asset connected with business. Further, Investment Asset is defined to include any securities held by Foreign Institutional Investors and any undertaking or division of a business.
▪	Additional deductions over and above the actual/ indexed cost of acquisition/improvement have been provided in computing capital gains for various Investment Assets depending on their nature and holding period, viz:
	-	On transfer of equity shares or equity-oriented mutual funds which have been held for more than one year and where STT has been paid on the transfer, a deduction equal to 100 per cent of the capital gains
	-	On transfer of equity shares or equity-oriented mutual funds which have been held for less than one year and where STT has been paid on the transfer, a deduction equal to 50 per cent of the capital gains.
The earlier DTC draft did not provide for any such deduction and also proposed doing away with STT.
▪	Fair market value substitution date and the indexation base date is proposed to be 1 April 2000.
▪	In respect of exemption on transfer of Investment Assets from holding company to WOS and vice versa, the proposed lock-in period for holding-100 per cent subsidiary relationship, is now capped at eight years. It further provides that the transferee should not convert the investment asset into stock in trade. In case these conditions are breached, the gains would be taxable in year of breach. Under the earlier DTC draft, conversion of the investment asset into stock in trade was taxable in the year of sale of asset.
▪	If the cost of acquisition/cost of improvement of an asset is not determinable by the taxpayer, then such cost shall be taken as nil and capital gains to be computed.
▪	Capital Gains Savings Scheme provided in the earlier DTC draft, for rollover of capital gains, has been done away with.
▪	The cost of acquisition with respect to various modes of acquisition of shares has been provided in the Seventeenth Schedule.
Mergers and Acquisitions
▪	Definition of amalgamation to include amalgamation of a firm, AOP, BOI into a company and other specified form of re-organisation.
▪	The consideration for demerger to be in the form of ‘equity’ shares issued by the resulting company to shareholders of demerged company.
▪	In case of amalgamation or demerger amongst foreign companies, the condition of 75 per cent shareholders continuing in the amalgamated/resulting company has been introduced for availing exemption from capital gains.
▪	Capital gains on transfer by way of slump sale of an undertaking/division would be subject to capital gains tax. Under the earlier DTC draft, the same was proposed to be treated as business income.
▪	DTC defines 'business reorganization'; 'amalgamation' (Reference to the Companies Act, 1956 incorporated); 'demerger', 'successor'; 'predecessor'.
▪	The present provision of providing exemption in respect of transfer of shares through the process of amalgamation/ demerger of a foreign company with another foreign company is proposed to be extended to all assets (i.e. investment assets).
▪	Liability of the successor in business widened and all proceedings taken against the predecessor may be continued against the successor from the stage at which it stood on the date of business re-organisation.
Personal Taxation Moderation of tax rates and increase in tax slabs
▪	Basic threshold limit proposed to be increased to INR 250,000 for resident senior citizens and to INR 200,000 for other individuals including resident women.
▪	Peak rate of 30 per cent applicable to income exceeding INR 1 million vis-a-vis INR 2.5 million proposed earlier.
Definition of residency and scope of income
▪	The category of 'Not Ordinarily Resident' abolished and only two categories of taxpayers proposed viz. residents and non-residents. The additional condition of 729 days retained only to ascertain taxability of overseas income.
▪	A citizen of India or person of Indian origin living outside India and visiting India will trigger residency by staying in India for more than 59 days vis-à-vis more than 181 days proposed earlier.
Income from employment
▪	Employment income proposed to be computed as the gross salary due, paid or allowed less the aggregate of the specified deductions.
▪	Exemptions such as house rent allowance, leave encashment and medical reimbursements have been retained. The exemption for medical reimbursements increased to INR 50,000. An allowance to meet personal expenses has been introduced. Leave travel concession and non-monetary perquisite have been done away with.
▪	Receipts under the Voluntary Retirement Scheme, Gratuity and Commuted Pension deductible from employment income subject to limits without the condition to make any prescribed investments.
▪	Employer contributions to approved Provident Fund, approved Superannuation Fund or any other approved fund to be deductible to the extent of prescribed limits as against aggregate proposed cap of INR 300,000 prescribed earlier.
Withholding tax on employment income
▪	Withholding tax on salaries is now proposed to be a part of the overall consolidated withholding tax provisions on all payments.
▪	Tax to be withheld on payment/credit.
Income from house property
▪	Gross rent to be calculated on the basis of actual rent received or receivable and not on presumptive basis (higher of contractual rent or presumptive rate of 6 per cent of rateable value/construction/acquisition cost as proposed earlier).
▪	Interest on housing loan on self-occupied property now available up to INR 150,000 as a deduction from gross total income. Further, interest relating to period prior to financial year in which the property has been acquired or constructed deductible in five equal installments.
▪	Deduction for repairs and maintenance to be 20 per cent of the gross rent.
▪	If shares of owners of property are not definite and ascertainable, such persons to be assessed as an association of persons in respect of such property.
▪	Property used as hospital, hotel, convention centre or cold storage and forming part of SEZ, income from which is computed under the head 'income from business' not to be included under income from house property as against all types of property occupied for business as proposed earlier.
▪	The deduction for service tax on payment basis has now been withdrawn.
▪	The arrears of rent to be taxable in the year of receipt, irrespective of ownership of property at that time with deduction for repairs and maintenance at 20 per cent of such arrears.
EEE regime for savings scheme
▪	All long-term retiral savings schemes moved to EEE regime as against Exempt-Exempt-Tax proposed earlier.
▪	Deduction in respect of investment in approved funds such as Provident Fund, Superannuation Fund or Pension fund reduced to INR 100,000 from INR 300,000. Further, any withdrawal therefrom now not taxable which exemption was earlier confined only to accumulated balance as on 31 March 2011.
▪	Receipts under a life insurance policy on death/maturity exempt from tax.
▪	Receipts of surrender value from life insurance policy and distributions from equity-linked insurance policies exempt subject to prescribed conditions.
Other deductions
▪	An aggregate deduction stipulated of INR 50,000 towards life insurance premium, health insurance premium and tuition fees for two children.
▪	Deduction to a person with disability and for medical treatment and maintenance of a dependent person with disability stipulated subject to prescribed conditions.
▪	Deductions in respect of contributions or donations to certain funds or nonprofit organisations proposed.
▪	An individual not receiving house rent allowance allowed deduction towards payment of rent up to a maximum limit of INR 2,000 per month, subject to prescribed conditions.
▪	The deduction for interest paid on loans for higher education for a period of eight years to be restored.
Mutual Funds, Venture Capital Funds & Insurance Companies Taxation of mutual funds Taxation of equity-oriented mutual funds
▪	Income received by mutual funds exempt from tax.
▪	Mutual funds liable to tax on distributed income @ 5 per cent.
▪	No withholding tax applicable on payment of income to unit-holders.
Taxation of income from equity-oriented mutual fund for unit-holders
▪	Income received from mutual funds exempt from tax.
▪	STT applicable on transactions in units of equity-oriented mutual funds.
▪	In respect of capital gain arising on transfer of unit of an equity-oriented fund on which STT has been paid, deduction would be allowed as under:
▪	100 per cent where the unit is held for more than one year
▪	50 per cent where the unit is held for one year or less.
Taxation of non-equity-oriented mutual funds
▪	Income received by mutual funds exempt from tax.
▪	Withholding tax applicable at the specified rates on payment of income to unit holders.
Taxation of income from non-equity-oriented mutual funds for unit-holders
▪	Income received from mutual funds taxable at normal rates. For non-residents, tax rate of 20 percent prescribed.
▪	STT not leviable on transactions in units of non-equity-oriented mutual funds.
▪	Capital gains tax applicable at normal rates. Indexation benefit available if the unit is transferred after one year from the end of the financial year in which it was acquired.
Taxation of venture capital funds
▪	Income of venture capital companies/funds from investment in unlisted venture capital undertaking (VCU) engaged in certain specified businesses exempt from tax.
▪	Income received by investor from the above stated Venture Capital Companies/Funds taxable as if it were income received by the investor had he made investments directly in the VCU.
▪	Income of venture capital funds from investment in companies not engaged in specified businesses to be governed by normal trust taxation provisions.
▪	Venture capital funds not subject to distribution tax on distribution of income to investors.
Insurance taxation Taxation of insurance business
▪	Profits of life insurance business to be the profits determined in shareholder's account (non-technical account), subject to certain adjustments.
▪	Profits of other than life insurance business to be profits as disclosed in annual accounts furnished under the Insurance Act, subject to certain adjustments.
▪	Exemption currently available to approved pension funds continued.
Tax on distribution by life insurance companies
▪	In case of approved equity-oriented life insurance schemes, the life insurance company is liable to pay distribution tax @ 5 per cent on income to be computed in a prescribed manner.
▪	Life insurer required to withhold taxes at specified rates in case of payment to resident policyholders in certain cases.
Tax implications for policy holders
▪	Deductions up to an aggregate ceiling of INR. 50,000 (including contribution for education of children) allowed in respect of contribution made by individuals or HUFs to effect or keep in force an insurance on life of specified persons subject to specified conditions or health insurance on health of specified persons.
▪	Sums paid to effect or keep in force a contract for annuity plan of any insurer as approved by the Board in accordance with the prescribed guidelines eligible for deduction up to an aggregate limit of INK 100,000 (along with other approved funds).
▪	Policy-holder allowed deduction/exemption of income arising under a life insurance policy:
	-	Where sum is received on completion of original period of contract of insurance and premium paid or payable for any of the years does not exceed 5 per cent of the capital sum assured.
	-	Where sums are received under an approved equity-oriented life insurance scheme and distribution tax is paid by the life insurer
	-	Where sums are received on the death of the insured person.
Wealth tax
▪	Every person, other than a NPO, liable to pay wealth-tax at the rate of 1 per cent on net wealth exceeding INR 10 million which is a much lower threshold as compared to the earlier proposed threshold of INR 500 million.
▪	The specified assets for computing 'net wealth' have been retained in line with existing taxable assets, with additional items as under:
	-	Archaeological collections, drawings, paintings, sculptures or any other work of art
	-	Watches with a value in excess of INR 50,000
	-	Bank deposits outside India, in case of individuals and HUFs, and in the case of other persons, any such deposit not recorded in the books of account
	-	Any interest in a foreign trust or any other body located outside India (whether incorporated or not) other than a foreign company
	-	Any equity or preference shares held by a resident in a CFC
	-	Cash in hand in excess of INR 200,000 in the case of an individual and HUF.
Compliance and procedural provisions Return of income and assessment
▪	The due date for filing the return of income for non-corporate taxpayers is 30 June of the year following the financial year and for other assesses is 31 August
▪	Belated/revised return can be filed within 24 months from the end of the financial year. In the draft DTC released in 2009, the due date for belated/revised returns was 21 months from the end of the financial year. The revised provision is in line with the current tax law
▪	Time period for furnishing a return in response to a notice pursuant to non-filing of a return reduced to 14 days
▪	An acknowledgement to be issued on receipt of each return of tax bases and initial processing to be completed within 12 months from the month in which the return is filed
▪	Reference to procedure for selection of cases for scrutiny assessments in line with risk management strategy as proposed in the draft DTC released in 2009 dropped in the revised DTC
▪	Time limit for making an application for rectification of mistake in an order/intimation has been increased to four years from the end of the financial year in which the order/intimation is passed
▪	Assessment to be completed within 21 months from the end of the financial year in which the return was 'due' (33 months in respect of the cases referred to transfer pricing officer).
▪	The time limit for issue of notice for selection of cases for scrutiny has been extended to six months from the end of the financial year in which the return is furnished.
▪	Assessment of taxes after search and seizure operations to be treated as tax base escaped assessment and would be subject to re-opening.
▪	A taxpayer failing to pay due tax/interest on self assessment before filing of return to be treated as assessee in default.
▪	Threshold limits for tax audit revised as under:
	-	gross receipts exceeding INR 2.5 million for person carrying on profession
	-	total turnover or gross receipts exceeding INR 10 million for person carrying on business.
▪	In case of change in officer or jurisdiction, the succeeding officer has to continue any proceedings from where the earlier officer has concluded the proceedings. This is likely to reduce the hardships to the taxpayers in case of change in officers.
▪	Disallowance of expenditure for non-withholding of tax or non-payment of tax would not be applicable if such tax is paid on or before the due date of filing of return of income. Further, if tax is paid after the due date of filing of return of income for such year, such expenditure would be allowed in the financial year in which the tax is paid
Appeals
▪	The CIT(A) and the Income Tax Appellate Tribunal cannot condone delay in filing of an appeal if delay exceeds a period of one year from the date specified.
▪	The Income Tax Appellate Tribunal may now suo moto amend any order passed by it, at any time within a period of four years from the date of the order with a view to rectifying any mistake apparent from the face of the record.
▪	Concept of National Tax Tribunal absent. Appeals against the order of the Income-tax Appellate Tribunal will lie before the High Court and not the National Tax Tribunal as envisaged earlier.
▪	Appeals against order of CIT, CIT(A) or an AO in pursuance of the directions of the DRP will lie before 'Authority for Advance Rulings' in case of Public Sector Companies.
Revision of orders by CIT
▪	Circumstances have been specified where the CIT can exercise revisionary powers.
▪	CIT cannot cancel an assessment and direct a fresh assessment during revisionary proceedings.
▪	An appeal against the order passed by the CIT revising an assessment order prejudicial to revenue will lie before the Income Tax Appellate Tribunal.
▪	Powers given to CIT to revise orders where the revision is not prejudicial to the assessee.
Penalties and Prosecution
▪	Maximum penalty reduced to two times of the tax sought to be evaded.
▪	In case of individuals and cooperative societies, penalty to be based on applicable marginal rates.
▪	Penalty orders can also be passed by CIT and CIT(A).
▪	CIT's power to reduce or waive penalty and grant immunity from penalty and prosecution removed.
▪	Every offence under the DTC is punishable with both imprisonment and fines apart from monetary penalties.
NPO related provisions
▪	In case of companies registered under Section 25 of the Companies Act, 1956, total income to be computed as per mercantile system.
▪	Outgoings inter alia to include amount accumulated or set apart for charitable activity, for up to three years, to the extent of 15 per cent of the total income (before accumulation) or 10 per cent of gross receipts, whichever is higher, and invested in the specified modes.
▪	Total income of NPOs (post accumulation), in excess of INK 100,000, liable to tax @ 15 per cent.
▪	NPOs taxable @ 30 per cent of their net worth, if they convert into or merge with any other form of organisation or fail to transfer their assets to another NPO on dissolution within the prescribed time limit.
▪	Public religious trusts fulfilling certain conditions and notified entities of public importance not liable to income-tax.
▪	NPOs to make application to the CIT in the prescribed form. Application not required by NPOs which are granted approval or registration under the Act, subject to fulfilment of prescribed conditions.
▪	Powers of the CIT regarding the cancellation or withdrawal of the approval extended to cases where activities of NPO are not in accordance with any law applicable to it or under which it was registered.
Other residuary provisions Income from residuary sources The following items over specified threshold included as income from residuary sources:
▪	Receipt of money and any specified property (shares, securities, jewellery, etc.), not being an immovable property, for inadequate or without consideration by an individual or a Hindu undivided family.
▪	Receipt of immovable property without consideration by an individual or a Hindu Undivided Family.
▪	Receipt of shares of a closely held company for inadequate consideration or without consideration by a firm or a company.
Settlement of cases
▪	Settlement Commission provisions have been re-introduced.
▪	The Settlement Commission shall admit an application after considering, inter-alia, the nature and circumstances of the case or the complexity of the investigation involved therein.
▪	Settlement Application can be made only if:
	-	Return of tax bases has been furnished by the applicant under DTC
	-	Additional tax payable on additional income disclosed is greater than INR 1 mn. In case of "search" matters, additional tax payable should be greater than INR 5 mn
	-	The additional tax payable together with interest is paid on or before filing of application.
▪	Settlement application can be made in case if proceedings are pending before the AO, subject to specified exceptions.
▪	The Settlement Commission shall within 20 days from the date of receipt of the application, either reject or allow the application, by passing an order in writing. If no such order passed, the application shall be deemed to be admitted.
▪	The Settlement Commission shall pass the final order within a period of 18 months from the end of the month in which the application was made.
▪	Every order of settlement passed shall be conclusive as to the matters stated therein and shall not be reopened in any proceedings under this DTC or under any other law for the time being in force.
▪	The Settlement Commission may grant immunity with respect to the imposition of any penalty or prosecution for any offence under DTC or under the Act or Wealth tax Act, 1957 subject to certain conditions.
Other Provisions Certain restrictions placed on the powers of the CBDT which were proposed in the draft DTC released in 2009 have now been dropped. This is in line with current tax law. The revised DTC has dispensed with the provisions relating to publication of all internal orders, instructions, directions and circulars issued by CBDT in a tax bulletin or on the intranet of the department.