Direct Taxes Code from April 2012
Increased exemption limits to benefit 96% taxpayers
n No special tax status for women

New Delhi, August 30
The government will lose over Rs 53,000 crore in tax revenue on account of the increase in exemption limits and tweaking of slabs in the Direct Taxes Code Bill, which will come into effect from April 1, 2012, a year behind the previous deadline.

The DTC was proposed to come into effect from April 1, 2011, but had to be pushed back by a year to allow a smooth switchover and understanding of the new regime.

Revenue Secretary Sunil Mitra said delayed implementation of DTC would give corporates and individuals enough time to set themselves on the right foot for the switchover from the Income Tax Act, 1961. As per the Bill, income from Rs 2-5 lakh will be taxed at 10 per cent; Rs 5-10 lakh at 20 per cent and 30 per cent thereafter.

The exemption on savings and as also payment of interest up to Rs 1.5 lakh on housing loan have been retained in the proposed DTC Bill.

Finance Minister Pranab Mukherjee tabled the Bill in the Lok Sabha and it has been referred to select committee of Parliament for scrutiny.

Similarly, the exemption limit for senior citizens, is sought to be raised marginally to Rs 2.5 lakh from Rs 2.40 lakh now. The proposed tax slabs are much lower than originally suggested in the draft DTC bill - 10 per cent for Rs 1.6 lakh to Rs 10 lakh, 20 per cent from Rs 10-25 lakh and 30 per cent for income above Rs 30 lakh.

According to estimates, an individual taxpayer earning more than Rs 10 lakh would save up to Rs 41,040 annually.

The legislation also proposes to increase MAT from 18 per cent to 20 per cent of book profit of a company. It seeks to levy dividend distribution tax at 15 per cent.

Women tax payers will lose their special status under the proposed Direct Taxes Code.

Relief to corporate taxpayers

The government today proposed to retain corporate tax at 30 per cent, but without the surcharge and cess that increase the current levy to over 33 per cent. The current tax rate for domestic companies, including surcharge and cesses, comes to about 33.22 per cent, while foreign companies pay over 40 per cent.

The bill sought to levy the same corporate tax rate on domestic and foreign companies. Tax experts said the proposal in the DTC Bill will provide much-needed relief to the industry and bring the levy on par with global standards.

In addition, the DTC also proposed to increase the minimum alternate tax rate to 20 per cent of book profit from the current 18 per cent. — PTI

Highlights

l I-T exemption limit raised to Rs 2 lakh

l Tax payer at highest level will save Rs 41,040

l I-T limit for senior citizens: Rs 2.5 lakh

l Corporate tax at 30%, Surcharge, cess to go

l MAT to be 20% of book profit

l Dividend distribution tax at 15%

Original draft

Income slab Tax

Rs 1.6L-10L 10%

Rs 10L-25L 20%

Above 25L 30%

DTC Bill

Income slab Tax

Rs 2L-5L 10%

Rs 5L-10L 20%

Above 10L 30%