New Delhi: The government Monday introduced Direct Taxes Code (DTC), offering much lower benefits than in the original proposal that seeks to increase tax exemption on income from Rs 1.6 lakh to Rs 2 lakh and fix the corporate tax at a flat 30 percent.
As per the Bill, income from Rs 2-5 lakh will be taxed at 10 percent; Rs 5-10 lakh at 20 percent and 30 percent thereafter.
The changes, when they take effect, will help save up to Rs 41,040 for people earning more than Rs 10 lakh a year.
The exemption on savings and as also payment of interest up to Rs 1.5 lakh on housing loan has been retained in the proposed DTC Bill.
While senior citizens will continue to enjoy greater tax exemption, women tax payers will lose their special status under the proposed Direct Taxes Code.
The Bill proposes to raise the tax exemption limit for senior citizens above 65 years to Rs 2.5 lakh per annum from Rs 2.4 lakh at present.
Finance Minister Pranab Mukherjee tabled the Bill in the Lok Sabha and it has been referred to select committee of Parliament for scrutiny.
Similarly, the exemption limit for senior citizens, is sought to be raised marginally to Rs 2.5 lakh from Rs 2.40 lakh now.
Currently, income from Rs 1.6-5 lakh attracts 10 percent tax; from Rs 5-8 lakh, 20 percent and beyond Rs 8 lakh, 30 percent.
The proposed tax slabs are much lower than originally suggested in the draft DTC bill -- 10 percent for Rs 1.6 lakh to Rs 10 lakh, 20 per cent from Rs 10-25 lakh and 30 per cent for income above Rs 30 lakh.
According to estimates, an individual tax payer earning more than Rs 10 lakh would save up to Rs 41,040 annually.
The legislation also proposes to increase MAT from 18 percent to 20 percent of book profit of a company. It seeks to levy dividend distribution tax at 15 percent.
When enacted, DTC will replace archaic Income Tax Act.