Mar. 15 – During the yearly Union Budget set to take place later this week, the Select Committee of Parliament is expected to replace the Income Tax Act (1961) after examining the Direct Tax Code Bill (DTC), and has recommended some very significant tax reforms and tax payer-friendly measures.
With regards to personal taxation, it is planned to elevate the annual exemption limit from Rs. 1.80 lakh to Rs. 3 lakh and the annual tax saving investment limit from Rs. 1.20 lakh to Rs. 3.20 lakh.
It also recommends implementing three tax slabs:
- 10 percent tax for incomes of Rs. 3-10 lakh
- 20 percent tax for incomes of Rs. 10-20 lakh
- 30 percent tax for incomes over Rs. 20 lakh
The DTC had planned an extra deduction of Rs. 50,000 for life insurance and health insurance premiums and tuition fees – bringing total deductions to Rs. 1 lakh. Additionally, a deduction of Rs. 1 lakh for higher education loans has been suggested.
The DTC also advises to tax wealth of Rs. 5 crore and above (presently Rs. 30 lakh and above) besides rationalizing the tax rates, and abolish the securities transaction tax (STT) levied currently on sales or purchases of securities. That would mean capital gains would be taxed again.
As far as corporate income tax rates are concerned, the panel has suggested retaining the present rate of 30 percent.
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