New Delhi, Aug 26 (ANI): The Union Cabinet on Thursday cleared the Direct Tax Code Bill, clearing decks for tabling the legislation in the Monsoon Session of Parliament so that the new act ushering in reduced tax rates and exemptions may come into effect from the next financial year.
The Bill, which comes as a a major relief for the salaried class, has been referred to the select committee, and will be introduced in Rajya Sabha on Monday.
The new provisions under the Direct Tax Code are as follows:
1. Tax for income between Rs two to five lakh : 10 percent
2. Tax for income between Rs five to ten lakh : 20 percent
3. Tax for income over Rs ten lakh : 30 percent
4. Corporate tax has been kept at 30 percent
The limit for exemptions for salaried people is Rs. two lakh, while that for senior citizens is Rs. 2.5 lakh.
The new Code comes into effect from April, 2011.
When enacted, the Code is expected to revolutionize the existing taxation system in India, by ushering in changes in the domains of personal and private tax structures..
Earlier, the Finance Ministry had come up with a draft on the DTC bill, some of whose provisions drew criticism from industry as well as the general public.
"As of now, it is proposed to provide the EEE (Exempt-Exempt-Exempt) method of taxation for Government Provident Fund (GPF), Public Provident Fund (PPF) and Recognised Provident Funds (RPF)," said revised DTC released by the Finance Ministry.
The revised draft also puts pensions administered by the interim regulator Pension Fund Regulatory and Development Authority (PFRDA), including pension of government employees who were recruited since January 2004, under EEE treatment.
The first DTC draft had proposed to tax all savings schemes including provident funds at the time of withdrawal bringing them under the EET mode.
Under the EEE mode, the tax exemption is enjoyed at all the three stages of investment, accumulation and withdrawal. (ANI)