DTC introduced in LS with marginal benefits

DTC introduced in LS with marginal benefits
PTI
NEW DELHI, AUG 30
Diluting some of the promises, government on Monday introduced in the Lok Sabha the long-awaited Direct Taxes Code Bill seeking to increase exemption threshold for income tax payers and reduce corporate taxes while removing the preferential treatment for women.
The 319-clause bill, tabled by Finance Minister Pranab Mukherjee, seeks to replace the five-decade old Income Tax Act, 1961, and will come into effect from April 1, 2012, one year later than promised earlier, if passed by Parliament.
Under the Code, the income tax exemption threshold will go up from Rs 1.6 lakh per annum to Rs 2 lakh, while the corporate tax rate will come down from 33.2 per cent to a flat 30 per cent.
Income from Rs 2-5 lakh is proposed to be taxed at 10 per cent; Rs 5-10 lakh at 20 per cent and 30 per cent thereafter. Though senior citizens, persons above 65 years, will get additional benefit, women tax payers will not be accorded special treatment available to them in the IT Act.
The new tax slabs will help save up to Rs 41,040 for people earning more than Rs 10 lakh a year and Rs 7,660 for income up to Rs 5 lakh.
The tax exemption on savings and as also payment of interest up to Rs 1.5 lakh on housing loan have been retained in the proposed Bill along with the EEE (exempt-exempt-exempt) mode of taxation for insurance and pension funds.
The moderation of taxes together with concessions are estimated to result in a revenue loss of Rs 53,172 crore in 2012-13 if the present rates were to be applied. The gross tax revenue from direct taxes will come down from an estimated Rs 5.80 lakh crore to Rs 5.27 lakh crore under the proposed code.
The Bill, which will also replace the Wealth Tax Act besides the IT Act, has been referred to a Parliamentary Committee for scrutiny and suggestions.
The new code will have 319 sections and 22 schedules as against 298 sections and 14 schedules of the existing IT Act.
As per the DTC Bill, the exemption limit for senior citizens, is proposed to be raised marginally to Rs 2.5 lakh from Rs 2.40 lakh now.
Currently, income from Rs 1.6-5 lakh attracts 10 per cent tax; from Rs 5-8 lakh, 20 per cent and beyond Rs 8 lakh, 30 per cent.