Ahead of the Budget, a Parliamentary panel that scrutinised the Direct Taxes Code Bill has suggested that Income Tax exemption limit be raised to Rs 300,000 per annum, and the investment limit for tax savings schemes be hiked to Rs 320,000.
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Tax exemption to be hiked to Rs 3 lakhs soon?
In its report, which was submitted to the Lok Sabha Speaker Meira Kumar on Friday, the Standing Committee on Finance suggested that the wealth tax limit be pegged at Rs 5 crore (Rs 50 million), while the Securities Transaction Tax be abolished.
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Tax exemption to be hiked to Rs 3 lakhs soon?
As regards the corporate tax, the Committee, which is headed by senior BJP leader and former Finance Minister Yashwant Sinha, recommended that the rate be retained at 30 per cent.
The report will pave the way for debate and passage of the DTC Bill, which seeks to replace the Income Tax Act, 1961, by Parliament.
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Tax exemption to be hiked to Rs 3 lakhs soon?
Besides hiking the income tax exemption to Rs 300,000 from Rs 1,80,000 at present, the Standing Committee also suggested that 10 per tax be levied on taxable income between Rs 300,000-10 lakhs (Rs 1 million), 20 per cent between 10-20 lakhs (Rs 1-2 million) and 30 per cent over Rs 20 lakhs.
At present, 10 per cent tax levied on income between Rs 1,80,000-500,000, 20 per cent on income between Rs 500,000-800,000 and 30 per cent above Rs 800,000.
The DTC has proposed income tax exemption limit at Rs 200,000, 10 per cent between Rs 200,000-500,000, 20 per cent Rs 500,000-10 lakhs (Rs 1 million) and 30 per cent above Rs 10 lakhs (Rs 1 million).
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Tax exemption to be hiked to Rs 3 lakhs soon?
With regard to tax savings scheme, the panel has proposed to raise the total tax exemptions limit under various scheme to Rs 320,000 from existing Rs 180,000 and Rs 200,000 suggested by the DTC.
With regard to the wealth tax, the committee suggested that it should be levied only if the value of specified asset exceeds Rs 5 crore (Rs 50 million) as against Rs 30 lakhs (Rs 3 million) currently and Rs 1 crore (Rs 10 million) suggested by the proposed DTC Bill.
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Tax exemption to be hiked to Rs 3 lakhs soon?
As regards the rate, it said, the wealth tax should be charged at 0.5 per cent on assets between Rs 5-20 crore (Rs 50-200 million), 0.7 per cent on assets between Rs 20-50 crore (Rs 200-500 million) and 1 per cent above Rs 50 crore (Rs 500 million).
The wealth tax rate now is 1 per cent.
The DTC Bill, which seeks to modernise the direct tax structure in the country, was referred to the Parliamentary Committee in August 2010.
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Tax exemption to be hiked to Rs 3 lakhs soon?
The government, pending approval of the DTC Bill by Parliament, is likely to introduce some measures concerning taxes in the forthcoming Budget itself to be presented by Finance Minister Pranab Mukherjee in the Lok Sabha on March 16.
The Budget Session of Parliament will begin on March 12 with President Pratibha Patil addressing the joint sitting of Members of the Lok Sabha and the Rajya Sabha.
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