The government is to come up with a modified Direct Taxes Code (DTC) Bill after incorporating the suggestions of the Standing Committee on Finance. One of the major suggestions is the raising of the annual income tax exemption limit to Rs. 3 lakh.
This was announced by Shri Parthasarathi Shome, Advisor to the Finance Minister. He told that the Ministry is studying into the DTC Bill and working on tax structures as suggested by the parliamentary committee.
"We are trying to see what could be the best in terms of transparency so that issues that are hurting industry could be covered adequately," Mr Shome said. He further said that the finance ministry is also addressing the issue of expenditure control and that remains a major challenge.
"We are looking into expenditure efficiency. We should do more in terms of efficiency. The issues on expenditure side is being addressed. Expenditure control is a major challenge and is being addressed by the Finance Minister," he said.The Standing Committee, which was headed by Yashwant Sinha, former finance minister during the NDA regime, in its report had suggested raising the annual income exemption tax limit to Rs. 3 lakh as against Rs. 2 lakh proposed in the original DTC Bill. The current tax exemption limit is Rs. 1.8 lakh.
It has also suggested that subsequent tax slabs be adjusted accordingly to provide relief to people reeling under the impact of inflation. The DTC will eventually replace the over five decade-old Income Tax Act.
The following are some of the other highlights of the recommendations:
- The exemption limit for savings be enhanced from Rs 1 lakh to Rs 1.5 lakh.
- The exemption limit for life and health insurance, and education, be doubled to Rs 1 lakh.
- A separate deduction of Rs 50,000 be permitted for higher education.
- For purchasing medical insurance for elderly parents and grandparents, an additional exemption of Rs 20,000 should be given.
- Further concessions for women and senior citizens in the tax slabs have also been recommended in the report.
- The panel has suggested that the senior citizen cut-off age be lowered to 60 years, instead of 65.
Now, the revised Direct Taxes Code (DTC) was very different from what Chidambaram had originally envisioned. So, it is likely to see the inclusion of the Standing Committee's recommendations and the Finance Ministry is keen to implement it from 2014. So, one can expect an announcement on DTC on the timeframe in the Budget as well.
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