The Direct Taxes Code (DTC) was first introduced by the Pranab Mukherjee in 2010, When he was the Finance Minister of India.
The Direct Tax Code is transparent, efficient and extremely simple that will replace the existing Income Tax Act 1961.The Direct Tax Code would provide the straight forward tax laws and it will remove the various exemptions on Income Tax. As of now we are paying the multiple different taxes like - Income Tax, Corporate Tax, Wealth Tax etc. DTC will consolidate these all in one book.
The Direct Tax Code has been delayed because of some account of tax laws that are largely controversial. So, it was referred to the parliamentary standing committee.
Recently finance minister P Chidambaram had said that the DTC bill will be introduced in the monsoon session of the parliament.
Some of the details of Direct Tax Code are given below from the modified proposal-
- The same tax exemption limits for men and women proposed at Rs. 2 lakh per annum.
- Tax exemption for senior citizens proposed at 2.5 Lac per annum
- Changes in the tax slab. 10% slab - 2 to 5 Lac, 20% slab - 5 to 10 Lac, 30% slab - For more than 10 lakh.
- Exemption for annual investment are proposed to Rs. 1.5 lakh. But DTC will remove the tax exemption from Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Unit Linked Insurance Plans (ULIPs), Long term infrastructures bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property.
- Deduction under 80C will be 1.5 lakh ( a 1 loss on Pension , PF and Gratuity funds and 50,000 on tuition fees, pure life insurance premium and health cover).
- Medical reimbursement limit will be 50,000.
- Tax exemption on Education loan will be remain same.
- For House Property Income : Deductions for Rent and Maintenance will be reduced from 30% to 20% of the Gross Rent. Also all interest paid on house loan for a rented house is deductible from rent.
- Tax exemption from Leave Travel Allowance (LTA) will be removed.
- After the DTC only half of the capital gain will be taxed.
- Taxes on Capital gains on listed securities if held for more than a year will not be taxed. For less than a year, it will be taxed at 5%, 10% or 15%.
- Mutual Funds/ULIP dropped from 80C deductions : Income from equity-oriented mutual funds or ULIP shall be subject to tax @ 5%
- DTC Proposed bill has 319 sections and 22 schedules against 298 sections and 14 schedules in existing Income Tax Act.
- DTC will replace the Income Tax Act ( many of the provisions of the Income Tax will be still the part of the DTC).
- FBP will be charged to the employee rather than the employer.
- By DTC annual tax burden at the highest level will come down by Rs. 41,040.
- Corporation Tax will be remain same (30%). But surcharge and education cess will be removed.
- MAT will be 20% of total booked profits.
- There is the proposal to levy a 15 % tax on dividend distribution.
Saturday, May 25, 2013
What is the Direct Tax Code and What are the benefits of Direct Tax Code
About the Author
Author & Editor