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India: New Tax Bill to Take Away Concession from Women
Source: siliconindia.com
Source Date: Tuesday, August 31, 2010
Focus: E-Procurement
Country: India
Created: Sep 05, 2010

Bangalore: Direct Taxes Code Bill that introduced in Parliament on Monday will bring some changes in personal and corporate taxation. The proposed Bill doesn't allow women to enjoy special income-tax exemptions. Incentives have been withdrawn for women tax payers by clubbing them with men, with income up to Rs.2 lakh exempt. The earlier proposal was to place women taxpayers and senior citizens at an exemption level of Rs.2.5 lakh. Only senior citizens will get extra relief - those with annual income of up to Rs 2.5 lakh need not pay tax.

The Bill, which will be operational from 1 April 2012, seeks an increase in exemption threshold of individuals from the current Rs.1.6 lakh to Rs.2 lakh and reduces corporate taxes to a flat 30 percent.
The key features of the Bill are tighter norms for international taxation, eventual replacement of profit-linked incentives with investment-linked incentives and the introduction of tax rates in the legislation to provide the government with flexibility and taxpayers a sense of stability on rates.
Housing loan comprises 50 percent of the total deduction of up to Rs 3 lakh on savings. Other deductions allowed include Rs.1 lakh on pension, PF and gratuity funds and up to Rs.50,000 for tuition fees of kids, pure life insurance premium and health cover.

DTC has offered major concessions to SEZ developers who have been demanding extension of tax benefits beyond March 31, 2011. The DTC proposes that developers be allowed profit-linked deductions for all SEZs notified on or before March 31, 2012. Units housed in SEZs will be allowed deductions, if they commence business by March 2014.

Income from equity-oriented mutual funds or life insurance schemes shall be subject to tax at 5 percent as against zero tax at present. Capital gains on listed securities held for more than a year will not be subject to tax. For those listed securities held for less than a year, it will be taxed at 5 percent, 10 percent or 15 percent depending on the marginal tax rate of the person. Securities transaction tax, however, will continue. In the bill, income between Rs 2 and 5 lakh is proposed to be taxed at 10 percent, Rs.5-10 lakh at 20 percent and 30 percent thereafter.

The concessions in DTC are estimated to result in a revenue loss of Rs.53,172 crore in 2012-13 if the present rates are to be applied, according to Revenue Secretary Mitra. The gross revenue from direct taxes will come down from an estimated Rs.5.8 lakh crore to Rs.5.27 lakh crore under the proposed code in that year. The bill, which will also replace the Wealth Tax Act besides the IT Act, has been referred to a parliamentary committee for examination. The new code will have 319 sections and 22 schedules as against 298 sections and 14 schedules of the existing IT Act.
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