Panel Proposes Hiking Income Tax Exemption Limit to 
3 Lakh
New Delhi: A parliamentary panel reviewing the Direct Taxes Code (DTC) bill has recommended raising the income tax exemption limit to 
3 lakh a year and the investment limit for tax saving schemes to 3.20 lakh.
The current tax exemption limit stands at 1.80 lakh.
The Standing Committee on Finance on the DTC bill, headed by former finance minister Yashwant Sinha, has proposed that a 10 percent tax be levied on income between 3-10 lakh, 20 percent between 10-20 lakh and 30 percent on income over 20 lakh.
The DTC had earlier proposed income tax exemption limit at 2 lakh, 10 percent tax on income between 2-5 lakh, 20 percent for 5-10 lakh and 30 percent on income above 10 lakh.
The committee has also suggested that the Securities Transaction Tax (STT) be abolished and the wealth tax limit be pegged at 5 crore.
As regards the rate, it said the wealth tax should be charged at 0.5 percent on assets between 5-20 crore, 0.7 percent on assets between 20-50 crore and 1 percent above 50 crore. The wealth tax rate now is 1 percent.
The STT is a levy on transactions in the stock market i.e. on purchase or sale of shares, derivatives and equity-oriented mutual funds.
However, the committee has suggested that corporate tax rate be retained at 30 percent.
"The committee has rightly struck the need to have balance in tax reforms by putting the onus and making the tax authorities accountable as well. Clearly, a lot of work will need to go in - as per suggestions and recommendations of the Committee - for the tax authorities to put back the draft into shape to be finally made into law," said Neeru Ahuja, partner at consulting major Deloitte Haskins & Sells.
The committee submitted its recommendations to Lok Sabha Speaker Meira Kumar Friday.
The DTC Bill seeks to replace the Income Tax Act, 1961.
Even before the DTC bill is passed by Parliament, the government may look at introducing some tax measures in the forthcoming Budget itself to be presented by Finance Minister Pranab Mukherjee in the Lok Sabha March 16.
Source: IANS
3 lakh a year and the investment limit for tax saving schemes to 3.20 lakh.
The current tax exemption limit stands at 1.80 lakh.
The Standing Committee on Finance on the DTC bill, headed by former finance minister Yashwant Sinha, has proposed that a 10 percent tax be levied on income between 3-10 lakh, 20 percent between 10-20 lakh and 30 percent on income over 20 lakh.
The DTC had earlier proposed income tax exemption limit at 2 lakh, 10 percent tax on income between 2-5 lakh, 20 percent for 5-10 lakh and 30 percent on income above 10 lakh.
The committee has also suggested that the Securities Transaction Tax (STT) be abolished and the wealth tax limit be pegged at 5 crore.
As regards the rate, it said the wealth tax should be charged at 0.5 percent on assets between 5-20 crore, 0.7 percent on assets between 20-50 crore and 1 percent above 50 crore. The wealth tax rate now is 1 percent.
The STT is a levy on transactions in the stock market i.e. on purchase or sale of shares, derivatives and equity-oriented mutual funds.
However, the committee has suggested that corporate tax rate be retained at 30 percent.
"The committee has rightly struck the need to have balance in tax reforms by putting the onus and making the tax authorities accountable as well. Clearly, a lot of work will need to go in - as per suggestions and recommendations of the Committee - for the tax authorities to put back the draft into shape to be finally made into law," said Neeru Ahuja, partner at consulting major Deloitte Haskins & Sells.
The committee submitted its recommendations to Lok Sabha Speaker Meira Kumar Friday.
The DTC Bill seeks to replace the Income Tax Act, 1961.
Even before the DTC bill is passed by Parliament, the government may look at introducing some tax measures in the forthcoming Budget itself to be presented by Finance Minister Pranab Mukherjee in the Lok Sabha March 16.