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I-T exemption limit to be hiked to Rs 3 lakhs soon?
A parliamentary panel is set to recommend sweeping changes in personal income tax slabs proposed in the Direct Taxes Code Bill.
A draft report prepared by Parliament's standing committee on finance suggests increasing the income tax exemption limit to Rs 300,000 a year against Rs 200,000 proposed in the Bill.
The committee, chaired by Bharatiya Janata Party leader and former Finance Minister Yashwant Sinha, wants a 10 per cent rate to kick in for annual income of Rs 300,000-10 lakhs (Rs 1 million), according to those in the know.
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I-T exemption limit to be hiked to Rs 3 lakhs soon?
The Bill proposes this rate to be imposed in a slab of Rs 200,000-500,000.
The draft report also recommends 20 per cent income tax rate be paid by those earning income of Rs 10-20 lakhs (Rs 1-2 million) a year.
This slab was proposed to be Rs 500,000-800,000 in the Bill.
Finally, the report wants the government to impose a peak rate of 30 per cent on annual income above Rs 20 lakhs (Rs 2 million), as against above Rs 10 lakhs (Rs 1 million) as sought in the Bill.
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I-T exemption limit to be hiked to Rs 3 lakhs soon?
The report is not final and minor tweaking of these suggestions could be incorporated after a meeting on Friday, according to the persons cited earlier.
Tax slabs needed to be progressive, they said, adding, "Most of the assesses would fall in the category of Rs 300,000-10 lakhs (Rs 1 million) a year, which should get a lower income tax rate of 10 per cent."
The finance ministry expects the standing committee to give its report in the Budget session of Parliament, so that DTC could be introduced from April 1, 2013.
The committee will finalise the report tomorrow and give it to the government.
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I-T exemption limit to be hiked to Rs 3 lakhs soon?
"It is up to the government to table the report in the Budget session or not," they said.
In fact, the suggestions in the draft report of the committee are much closer to the original discussion paper put out by the finance ministry on DTC.
That paper had suggested a 10 per cent tax rate for Rs 160,000-10 lakhs (Rs 1 million) a year, 20 per cent for Rs 10-25 lakhs (Rs 1-2.5 million) and 30 per cent for income above Rs 25 lakhs (Rs 2.5 million) a year.
But, the paper had also proposed to do away with a host of exemptions.
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I-T exemption limit to be hiked to Rs 3 lakhs soon?
After certain quarters protested, the ministry proposed in the Bill to give some of those exemptions but also narrowed the income tax slabs.
Currently, income of Rs 180,000-500,000 attracts 10 per cent income tax, Rs 500,000-800,000, 20 per cent and above Rs 800,000 30 per cent.
The standing committee's draft report wants the government to cautiously implement the General Anti-Avoidance Rules.
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I-T exemption limit to be hiked to Rs 3 lakhs soon?
These provisions, contained in the Bill, are aimed at authorising the tax department to demand tax in situations where the main motive of a transaction is to have a tax advantage.
These provisions have assumed importance after the government lost the Vodafone case in the Supreme Court.
Many believe the Budget may incorporate the proposal, even before the introduction of DTC.
