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Besides hiking the income tax exemption to Rs3 lakh from Rs1.8 lakh at present, the Standing Committee on Finance also suggested that 10% tax be levied on taxable income between Rs3-Rs10 lakh, 20% between Rs10-Rs20 lakh and 30% over Rs20 lakh
New Delhi: Ahead of the Budget, a parliamentary panel that scrutinised the Direct Taxes Code (DTC) Bill has suggested that income tax exemption limit be raised to Rs3 lakh per annum, and the investment limit for tax savings schemes be hiked to Rs3.20 lakh, reports PTI.
In its report, which was submitted to the Lok Sabha speaker Meira Kumar today, the Standing Committee on Finance suggested that the wealth tax limit be pegged at Rs5 crore, while the Securities Transaction Tax (STT) be abolished.
As regards the corporate tax, the committee, which is headed by senior BJP leader and former finance minister Yashwant Sinha, recommended that the rate be retained at 30%.
The report will pave the way for debate and passage of the DTC Bill, which seeks to replace the Income Tax Act, 1961, by Parliament.
Besides hiking the income tax exemption to Rs3 lakh from Rs1.8 lakh at present, the Standing Committee also suggested that 10% tax be levied on taxable income between Rs3-Rs10 lakh, 20% between Rs10-Rs20 lakh and 30% over Rs20 lakh.
At present, 10% tax is levied on income between Rs1.8-Rs5 lakh, 20% on income between Rs 5-Rs8 lakh and 30% above Rs8 lakh.
The DTC has proposed income tax exemption limit at Rs2 lakh, 10% between Rs 2-Rs5 lakh, 20% Rs5-Rs10 lakh and 30% above Rs10 lakh.
With regard to tax savings scheme, the panel has proposed to raise the total tax exemptions limit under various schemes to Rs3.2 lakh from existing Rs1.8 lakh and Rs2 lakh suggested by the DTC.
With regard to the wealth tax, the committee suggested that it should be levied only if the value of specified asset exceeds Rs5 crore as against Rs30 lakh currently and Rs1 crore suggested by the proposed DTC Bill.
As regards the rate, it said, the wealth tax should be charged at 0.5% on assets between Rs5-Rs20 crore, 0.7% on assets between Rs20-Rs50 crore and 1% above Rs50 crore. The wealth tax rate now is 1%.
The DTC Bill, which seeks to modernise the direct tax structure in the country, was referred to the Parliamentary Committee in August 2010.
The government, pending approval of the DTC Bill by Parliament, is likely to introduce some measures concerning taxes in the forthcoming Budget itself to be presented by finance minister Pranab Mukherjee in the Lok Sabha on 16th March.
The Budget Session of Parliament will begin on 12th March with president Pratibha Patil addressing the joint sitting of members of the Lok Sabha and the Rajya Sabha.