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Speaking at a press conference in the capital, the Finance Minister however refrained from mentioning a probable date for the introduction of DTC. The DTC is set to replace the now out-of-date Income Tax Act of 1961.
A Parliamentary Panel headed by Mr. Yashwant Sinha, the former Finance Minister of India, has made several key recommendations that are set to change Income Tax norms in the country. The DTC Bill was to be initially introduced at the beginning of the Financial Year of 2012 on April 1. However, since the Standing Committee tabled the revised report before the Parliament only in March 2012, the Bill suffered a delay.
The DTC has undergone revisions and the present recommendations differ from the original draft in several departments, especially those related to an individual?s Income Tax exemptions. The amount of Income Tax imposed for different slabs of income is also set to undergo changes in favor of the taxpaying population.
The Standing Committee has recommended a substantial increase in exemption limits with tax exemption to be allowed for those earning an income of Rs. 3 lakh as against the current limit of only Rs. 2 lakh. The recommendations of the Committee also includes the Income limit to be increased from Rs 5 lakh to Rs.10 lakh for the 10% slab, Rs. 10 lakh to Rs. 20 lakh for the 20% slab, and above Rs. 20 lakh instead of Rs. 10 lakh for the 30% slab. The only constant seems to be the Corporate Tax Rates which remain at 30%.
In addition to changes in the Taxation slabs, the Committee also recommends a raise in the Income Tax exemption limit of Long Term Savings from the current amount of 1 lakh to Rs. 1.5 lakh. An individual?s pension up to an amount of Rs. 1.5 lakh, medical insurance up to Rs. 1 lakh, an amount of Rs. 50,000 for education and professional studies, as well as medical insurance for dependent parents to the tune of Rs. 50,000 are all expected to be placed under the Income Tax Exempt banner as well.
Mr. Aashish Ramchand, the Co Founder of Make My Returns, among India?s leading Tax Consultant portals, welcomed the announcement saying, ?The standing committee's recommended changes to the current taxation system will definitely benefit the aam aadmi or common man. The increase in the relevant tax slabs i.e. up to 3 lakh - exempt, from 3 lakh to 10 lakh - 10%, from 10 lakh to 20 lakh - 20%, and above 20 lakh - 30%, will definitely lead to an increase in personal disposal income. Similarly the increase in 80 C limits from 1 lakh to 1.5 lakh will also help decrease the tax liability of individuals as various tax savings schemes will now be preferred.?
Mr. Ramchand also made an observation with regards to the revised DTC Bill?s benefits to the economy and said, ?The overall increase in the personal disposal income of an individual will benefit the Indian economy and lead to an increase in consumption and spending thus increasing the GDP.?
The Finance Minister?s announcement increases the hopes of a majority of the Indian populace who are hoping to save on a substantial amount of Income Tax once the Standing Committee?s recommended changes to the DTC Bill are accepted.
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