New Direct Tax Code (DTC) 2011 Bill – Direct Tax Code India 2011 – Direct Tax Code Highlights
The New Direct Tax Code (DTC) 2011 Bill or Direct Tax Code India 2011 draft or Direct Tax Code Highlights has been released by finance minister Pranab Mukherjee which would replace current Income Tax structure from 2011- 12. This New Direct Tax Code (DTC) 2011 Bill or Direct Tax Code India 2011 draft will be applicable from Financial Year 2011-12 starting from 1st Day of April 2011 and Direct Tax Code Highlights has been declared. The new Direct Tax Code (DTC) bring relief to the taxpayers, as the tax slabs have been simplified further which was approved by Cabinet yesturday on August 26, 2010. The taxpayers can now get more benefits.
Key Features of New Direct Tax Code (DTC) 2011 Bill:
- Tax Exemptions for Salaried People – Rs 2 lakh
- Tax Exemption for Senior Citizens – Rs 2.5 lakh
- Tax for Income between Rs 2 lakh and Rs 5 lakh – 10%
- Tax for Income between Rs 5 lakh and Rs 10 lakh – 20%
- Tax for Income over Rs 10 lakh – 30%
- Rs 1.5 lakh Tax Incentives on Housing Loans will continue
- The DTC provides for MAT of 20 per cent of book profits of companies
The original draft had promised a whole new paradigm in direct taxation, drastically lowering the tax burden while also doing away with most exemptions. A revised draft released in June this year brought back some of the exemptions like the one available for interest on housing loans that the first draft had proposed to get rid of.
The speculation that this might force the finance ministry to make the revision of tax slabs also less ambitious to avoid giving away too much revenue has now proved well-founded. Under the original proposal, the 10% slab would have extended up to Rs 10 lakh and the 20% slab up to Rs 25 lakh, meaning that the 30% rate would have applied only to incomes of over Rs 25 lakh per annum.
On the plus side for individual taxpayers, withdrawal 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 or tuition fees.