Come next fiscal, all taxpayers will have something to cheer about as the Union Cabinet on Thursday approved the long-awaited Direct Taxes Code (DTC) Bill under which the government has proposed to hike the income tax exemption limit to Rs. 2 lakh from the existing base of Rs. 1.6 lakh.
The Bill, which also seeks to remove surcharge and cesses on corporate tax as a measure of providing relief to industry while simplifying taxation norms, is expected to be tabled in Parliament during the current extended monsoon session and referred to a select panel of members of both Houses for vetting.
Speaking to the media after the Cabinet meeting, Finance Minister Pranab Mukherjee indicated that the basic exemption limit for income tax is proposed to be raised to Rs. 2 lakh from the current Rs. 1.6 lakh. As for the new tax slabs, he said: “That will be discussed in Parliament.”
Although exact details are not available, indications are that an annual income of Rs. 2-5 lakh would attract a tax rate of 10 per cent while those in the Rs. 5-10 lakh category would have to pay 20 per cent and above Rs. 10 lakh at 30 per cent. As of now, senior citizens and women are likely to get some additional relief in tax slabs.
Archaic Act to be replaced
Explaining the purpose of the DTC Bill aimed at replacing the archaic Income Tax Act, 1961, Mr. Mukherjee said: “The whole objective is that a plethora of exemptions will be limited. [Income] tax slabs will be three. Rate of taxes will be taken in the schedule so that they need not be changed every year.”
