Today’s good news for taxpayers, who wants to save their money not easing to tax, is that the Parliamentary standing committee on finance in line with the DTC Bill this budget recommends hiking basic tax exemption limit from Rs 1.8 lakh to Rs 3 lakh and another Rs 3.20 lakh rebate for eligible investments and spending.
However while these recommendations will approve by govt., then taxpayers would pay tax on upto Rs 6.20 lakh as against a maximum of Rs 4.85 lakh including the rebate for housing loans.
And as result, the report will give a saving of nearly Rs 42,000 a year for those in the highest tax bracket along with tax benefits for life, health, and education up to Rs 1 lakh. Insurance incurred on dependent seniors, not just parents but also grandparents, to the extent of Rs 50,000 should also be given tax benefits.
Although, some members of Parliamentary Panel had favoured an increase in tax exemption to upto Rs 5 lakh during discussions they converged on keeping it at Rs 3 lakh in the final report. And the Direct Taxes Code Bill had proposed the basic exemption limit of Rs 2 lakh.
A Member of Parliament disclosed, “The committee has adopted the report that would be submitted to Parliament within a week.”
Even the panel has no relief for corporate tax payers and has recommended retaining the corporate tax rate at 30% as against 25% proposed, but suggested retaining the three-slab structure of 10%, 20% and 30% for personal income tax.
In addition, the senior citizen age may be reduced from 65 to 60 in this budgetary session. The draft that finalizing in DTC, is also seeking the government’s steps to fix a threshold to take up a tax avoidance case.
The DTC Bill, meanwhile, will replace the over 50 years old Income Tax Act, 1961, that is not likely to be passed by Parliament in the budget session, but the government, pending could introduce some of its measures contained in the bill in the Budget for 2012-13 that will be presented on March 16.
