FM comes up with more changes in Direct Tax Code draft bill

P ChidambaramP. Chidambaram-led finance ministry has made some more changes in the Direct Tax Code draft bill that aims to replace the country's income tax act of 1961.

In the revised DTC, the finance ministry has accepted 153 of 190 recommendations made by Yashwant Sinha-headed parliamentary standing committee on income tax.

However, the finance ministry didn't accept the standing committee's recommendation that the limit of income tax exemption should be hiked to Rs 3 lakh and the remaining tax slabs should be relaxed.

According to existing tax slab structure, no tax is charged on annual income of up to Rs 2 lakh; while people earning Rs 2-5 lakh and 5-10 lakh per annum have to pay 10 per cent and 20 per cent, respectively, of their income in tax to the government. An income beyond Rs 10 lakh attracts a tax of 30 per cent.

Sonu Iyer, Tax Partner at E&Y, said, "Retaining the current tax structure is a good move as the widening of tax slabs would have had come at a huge cost to the exchequer, something that the government is not in a position to do."

One of the accepted suggestions is the lowering the age for tax exemption for senior citizens from 65 years to 60 years. The revised code also proposes to charge super-rich (people who have an annual income of more than Rs 10 crore) higher taxes (35 per cent).

It also proposes a 10 per cent additional tax on those who earn dividends of more than Rs 1 crore per year.




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