Good news for all Tax payers!
The Union Cabinet on Thursday approved a new set of direct tax rules that proposes to raise income tax exemption limit from 1.6 lakh to 2 lakh, leaving more money in the hands of individuals.
The much awaited DTC or the Bill which seeks to replace the nearly 50-year-old income tax law, is going to be introduced in the parliament very shortly and may then be referred to a select committee of members.
Some key highlights considering the new code are as follows:
• The basic exemption limit is proposed to be raised to 2 lakh from the current 1.6 lakh and corporate tax rate for both domestic and foreign companies proposed is at 30%.
• Senior citizens and women will enjoy a higher exemption to up to 2.5 lakh. There will be no surcharge or cess on companies, thereby bringing the corporate tax rate to 30% from present 34%.
• The new code proposes three income tax slabs—income of up to 2-5 lakh will face 10%, 5-10 lakh will attract 20% and income over 10 lakh will face tax at the rate of 30%. The housing loan exemption of 1.5 lakh would also be available to individual taxpayers on the interest component.
According to the Finance Minister the whole objective is that a plethora of exemptions will be limited. Income tax slabs will be three. Rate of taxes will be taken in the schedule so that they need not be revised every year.
However, the government also proposes to raise the minimum alternate tax (MAT) on book profits to 20% from current 18%. The move could be a big blow for a host of IT and infrastructure companies that pay MAT.
If passed, the new Direct Tax Code will come into action from Apr 1, 2011.
Source:ET
The Union Cabinet on Thursday approved a new set of direct tax rules that proposes to raise income tax exemption limit from 1.6 lakh to 2 lakh, leaving more money in the hands of individuals.
The much awaited DTC or the Bill which seeks to replace the nearly 50-year-old income tax law, is going to be introduced in the parliament very shortly and may then be referred to a select committee of members.
Some key highlights considering the new code are as follows:
• The basic exemption limit is proposed to be raised to 2 lakh from the current 1.6 lakh and corporate tax rate for both domestic and foreign companies proposed is at 30%.
• Senior citizens and women will enjoy a higher exemption to up to 2.5 lakh. There will be no surcharge or cess on companies, thereby bringing the corporate tax rate to 30% from present 34%.
• The new code proposes three income tax slabs—income of up to 2-5 lakh will face 10%, 5-10 lakh will attract 20% and income over 10 lakh will face tax at the rate of 30%. The housing loan exemption of 1.5 lakh would also be available to individual taxpayers on the interest component.
According to the Finance Minister the whole objective is that a plethora of exemptions will be limited. Income tax slabs will be three. Rate of taxes will be taken in the schedule so that they need not be revised every year.
However, the government also proposes to raise the minimum alternate tax (MAT) on book profits to 20% from current 18%. The move could be a big blow for a host of IT and infrastructure companies that pay MAT.
If passed, the new Direct Tax Code will come into action from Apr 1, 2011.
Source:ET
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