Direct Taxes Code only from April 2012

Union Finance Minister Pranab Mukherjee during the ongoing monsoon session in the Lok Sabha. File photo  

In a surprise move and to the disappointment of taxpayers, the government on Monday deferred the implementation of the Direct Taxes Code (DTC) by a year to April 1, 2012, and sought to waive the preferential treatment to women in tax payment in the name of gender equity.

Under the Direct Taxes Code Bill, 2010 — tabled in the Lok Sabha by Finance Minister Pranab Mukherjee and referred to the Select Committee of Parliament for scrutiny — the government has sought to raise the income tax exemption limit from Rs.1.6 lakh to Rs.2 lakh while retaining a host of incentives for individuals.

While senior citizens (above 65 years) will enjoy a higher exemption of Rs.2.5 lakh, women taxpayers will have no additional relief as they have not been categorised separately.

As for corporate taxes, the levy will be at a flat rate of 30 per cent with no surcharges or cesses. The minimum alternate tax (MAT) will be levied on book profits at 20 per cent.

Explaining the features of the Bill at a press conference here, Revenue Secretary Sunil Mitra maintained that the moderation of taxes along with concessions would result in a revenue loss of Rs.53,172 crore in 2012-13 if the present rates were to be applied. The gross tax revenue from direct taxes would come down from an estimated Rs.5.80 lakh crore to Rs.5.27 lakh crore under the proposed code. “Totally, we would lose — because of the provisions of rates of taxes proposed in the DTC Bill — around Rs.53,172 crore [in tax revenues]. Therefore, the collection level will stand at Rs.5.27 lakh crore [in 2012-13],” Mr. Mitra said.

Asked why the government sought to defer the implementation, he said: “The issue that the operation has been put on hold for a year is to allow all three categories [tax practitioner, taxpayer, and tax administrator] enough time to become adequately familiar with the new provisions in the DTC.”

The delayed implementation would afford corporates and individuals enough time to set themselves on “the right foot” for the switchover from the Income Tax Act, 1961.

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Printable version | Dec 2, 2021 1:10:52 AM |

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