Panel
proposes hiking income tax exemption limit to Rs.3 lakh
Friday March 09, 2012 09:18:07 PM,
IANS
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New Delhi: A
parliamentary panel reviewing the Direct Taxes Code (DTC) bill has
recommended raising the income tax exemption limit to Rs.3 lakh a
year and the investment limit for tax saving schemes to Rs.3.20
lakh.
The current tax exemption limit stands at Rs.1.80 lakh.
The Standing Committee on Finance on the DTC bill, headed by
former finance minister Yashwant Sinha, has proposed that a 10
percent tax be levied on income between Rs.3-10 lakh, 20 percent
between Rs.10-20 lakh and 30 percent on income over Rs.20 lakh.
The DTC had earlier proposed income tax exemption limit at Rs.2
lakh, 10 percent tax on income between Rs.2-5 lakh, 20 percent for
Rs.5-10 lakh and 30 percent on income above Rs.10 lakh.
The committee has also suggested that the Securities Transaction
Tax (STT) be abolished and the wealth tax limit be pegged at Rs.5
crore.
As regards the rate, it said the wealth tax should be charged at
0.5 percent on assets between Rs.5-20 crore, 0.7 percent on assets
between Rs.20-50 crore and 1 percent above Rs.50 crore. The wealth
tax rate now is 1 percent.
The STT is a levy on transactions in the stock market i.e. on
purchase or sale of shares, derivatives and equity-oriented mutual
funds.
However, the committee has suggested that corporate tax rate be
retained at 30 percent.
"The committee has rightly struck the need to have balance in tax
reforms by putting the onus and making the tax authorities
accountable as well. Clearly, a lot of work will need to go in -
as per suggestions and recommendations of the Committee - for the
tax authorities to put back the draft into shape to be finally
made into law," said Neeru Ahuja, partner at consulting major
Deloitte Haskins & Sells.
The committee submitted its recommendations to Lok Sabha Speaker
Meira Kumar Friday.
The DTC Bill seeks to replace the Income Tax Act, 1961.
Even before the DTC bill is passed by Parliament, the government
may look at introducing some tax measures in the forthcoming
Budget itself to be presented by Finance Minister Pranab Mukherjee
in the Lok Sabha March 16.
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