While reducing the tax exemption age for senior citizens to 60 years, the finance ministry rejected Parliamentary Committee’s proposal to raise income tax exemption limit to Rs3 lakh
The Finance Ministry has rejected a Parliamentary Standing Committee’s recommendation to raise the income-tax (I-T) exemption limit to Rs3 lakh and to adjust other slabs. It has however decided to reduce the age for tax exemption for senior citizens to 60 years from 65 years.
As per the current structure, there is no tax on income of up to Rs2 lakh per annum; 10% on Rs2-5 lakh; 20% on Rs5-10 lakh and 30% on income beyond Rs10 lakh.
The Ministry on Tuesday released a revised and comprehensive draft direct taxes code (DTC) 2013 for comments. “The recommendation (to increase the exemption limit) is not acceptable as it will result in huge revenue loss. The total revenue loss on account of recommended changes in personal I-T slabs and removal of cess works out to about Rs60,000 crore,” the proposed DTC 2013 said.
The revised version of the DTC is aimed at widening tax net, removing ambiguities and plugging loopholes in the current tax laws to check tax evasion.
In the draft, 153 out of 190 recommendations made by the Standing Committee of Finance are accepted. This includes, relaxing the age for senior citizens to 60 years from 65 years and setting up tax rate of 35% for individual, Hindu undivided family (HUF) with an income over Rs10 crore.
“With a view to maintaining overall progressivity in levy of income tax, the revised Code provides for a fourth slab for individuals, HUFs and artificial judicial persons. In their case if the total income exceeds Rs10 crore, it is proposed to be taxed at the rate of 35%,” the ministry added.
The draft DTC also proposes to levy an additional 10% tax on dividend income exceeding Rs1 crore.
The earlier version of the DTC had said a company was liable to be taxed in India only if 50% of its assets were located in the country. However, according to the new draft, a company would be liable to be taxed in India if it has 20% of its total assets located in the country.
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