Direct Taxes code

The Direct Taxes Code (DTC) is said to replace the existing Indian Income Tax Act, 1961 will be rolled in 2014. The highlights of the Direct Taxes Code bill are

  • Common threshold Income Tax limits and women proposed at 200,000 Rupees per annum (proposed), up from 180,000
  • 10 per cent tax on annual income between 200,000-500,000; 20 per cent up to 1 million, 30 per cent above 1 million rupees
  • Tax burden at highest level will come down by Rs. 41,040 annually
  • Proposal to raise tax exemption for senior citizens to Rs. 250,000 from 240,000 lakh currently.(NOTE:- Union budget 2011-12 already has proposed it.)
  • Corporate Tax to remain at 30 per cent but without surcharge and cess
  • MAT to be 20 per cent of book profit, up from 18.5 per cent
  • Proposal to levy dividend distribution tax at 15 per cent
  • Exemption for investment in approved funds and insurance schemes proposed at Rs. 150,000 annually, against 120,000 currently
  • Proposed bill has 319 sections and 22 schedules against 298 sections and 14 schedules in existing IT Act
  • Once enacted, DTC will replace archaic Income Tax Act
  • However, many provisions in Income Tax Act will be a part of DTC as well
  • Mutual Funds/ULIP dropped from 80C deductions : Income from equity-oriented mutual funds or ULIP shall be subject to tax @ 5%
  • Fringe benefits tax will be charged to the employee rather than the employer

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