The DTC Bill, which seeks to replace the archaic Income Tax Act, 1961, proposes to raise the Income Tax exemption limit from existing Rs 1.6 lakh to Rs Two lakh, highly placed sources said. The Income Tax exemption limit for senior citizens is proposed to be raised to Rs 2.5 lakh.
Under the moderate tax slab suggested in the DTC Bill the government proposes tax rate of
10 per cent for income between Rs 2 lakh and Rs 5 lakh,
20 per cent for income between Rs 5 lakh and Rs 10 lakh and
30 per cent for income over Rs 10 lakh.
Currently the Income Tax rate is 10 per cent on income above Rs 1.6 lakh and up to Rs 5 lakh, 20 per cent on income above Rs 5 lakh and up to Rs 8 lakh and 30 per cent on income above Rs 8 lakh.
Provisions of the DTC Bill stipulating the tax rates in direct tax front including Income Tax and Corporate Tax will come into effect once it the legislation is approved by both houses of Parliament. The government plans to implement various provisions of the DTC Bill with effect from 1st April 2011.
On the plus side for individual taxpayers, withdrawals from provident funds will not be taxed as the original DTC had proposed to do. Also deductions from taxable income will be available for interest on housing loans up to Rs.1.5 lakh per annum and on payments into PF and similar superannuation schemes up to rs.1 lakh. Also available will be a deduction of up to Rs. 50,000/- for life insurance and health insurance premiums for tuition fees.
It is learnt that the government is likely to introduce the DTC Bill soon in both houses of Parliament. After its introduction the draft DTC will be sent to Select Committee of both houses for scrutiny.
After examining the recommendations of the Select Committee the government will move the DTC Bill for approval of Parliament in the Winter Session.
Sources : Deccan Herald