Direct Tax Code Draft
- Important Note: This is only a draft.
- The Government will consider inputs and suggestions received from the public before finalizing the Direct Taxes Code Bill for introduction in Parliament.
- Government has initiated radical tax reforms through a draft code that aims at moderating Direct Tax and other changes.
- Direct Taxes Code will ultimately replace over four-decades old Income Tax Act and bring all other direct taxes like wealth tax under its purview.
Highlights of proposed tax code:
- Tax law in simple and easy to understand language.
• Personal Income tax rates to be slashed substantially.
Up to 10 lacs: 10%
Over 10 lacs: 20%
Over 25 lacs: 30%
• Agricultural income will continue to be included under taxable income only fro rate purposes.
• Wealth tax exemption limit to be raised to 50 crores. To include financial assets like shares.
• Saving limit to be increased from 1 lac to 3 lacs.
• Tax exempt Savings to be taxed at the time of maturity under the Exempt Exempt Tax(EET) system. Savings before 1-4-2011 not to be included under EET.
• Losses to be allowed to be carried forward indefinitely.
• TDS to be deposited in the year of deduction. For last quarter, TDS can be deposited till due date of filing ITR. If TDS not deposited within 2 years from end of year of deduction, expenditure shall be disallowed.
• TDS rates to be reduced in some cases like payment to contractors and rent of machinery to 1%.
• Due dates filing income tax returns:
- Co’s and other audit cases : Aug.31
- Others : June 30
- Revised return or belated return can be filed within 21 months from the end of the financial year.
- Valuation of perquisites like rent free accommodation to be same in case of all employees whether in government or private sector.
- Gratuity to be exempt only if invested in a retirement fund.