Government may increase Income Tax exemption Limit in budget 2011-12
Due to the high inflation impact, the central government may hike the Income Tax Limit in the coming Budget on February 28 for the Financial Year 2011-2012.
Women: - 1.9 lakh
Senior Citizen - 2.4 lakh.
In the Direct Tax Code Bill which was presented in the Parliament this year, the tax exemption limit is 2 lakhs. But DTC will come in 2012 April only.
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Discussion on Direct Tax Code
Cabinet Approves Direct Tax Code
Cabinet Clears the Direct Tax Code (DTC) Bill in Parliament.
The Cabinet at its hour-long meeting chaired by the Prime Minister discussed at length various provisions of the DTC Bill, which will seek to bring about radical reforms and simplification in direct tax structure including the Income Tax rates and exemptions.
Features:* It will be effective From April 1, 2011.
* It will Replace the old Income Tax Act which is 50 years old.
* Employees have to pay less direct tax in each slab of income.
* Limit of exemption for salaries employees : 2 Lakhs.
* Limit of exemption for senior citizens: 2.5 Lakhs.
* Tax for income between Rs. 2 lakhs - Rs. 5 lakhs: 10%
* Tax for income between Rs. 5 lakhs - Rs. 10 lakhs: 20%
* Tax for income over Rs.10 Lakhs 30 %.
* Corporate Tax 30 %.
The draft Direct Taxes Code (DTC) along with a Discussion Paper was released in August, 2009 for public comments. Since then, a number of valuable inputs on the proposals outlined in these documents have been received from a large number of organisations and individuals.
These inputs have been examined and the major issues on which various stakeholders have given their views have been identified. This Revised Discussion Paper addresses these major issues. There are a number of other issues which have been raised in the public feedback, which, though not part of this Discussion Paper, will be considered while finalising the Bill for introduction in Parliament. The issues which this Revised Discussion Paper addresses are:
i. Minimum Alternate Tax (MAT) - Gross assets vis-a-vis book profit.
ii. Tax treatment of savings - Exempt Exempt Tax (EET) vis-a-vis Exempt Exempt Exempt (EEE) basis.
iii. Taxation of income from employment - Retirement benefits and perquisites.
iv. Taxation of income from house property.
v. Taxation of capital gains
vi. Taxation of non-profit organisations
vii. Special Economic Zones – Taxation of existing units
viii. Concept of Residence in the case of a company incorporated outside India.
ix. Double Taxation Avoidance Agreement (DTAA) vis-a-vis domestic law.
x. Wealth Tax.
xi. General Anti Avoidance Rule (GAAR).
Paragraph 1 in each Chapter describes the proposals in the DTC and Discussion Paper, paragraph 2 highlights the issues and concerns raised and paragraph 3 details the revised proposals in response to these concerns.