DTC review on; may bring relief on I-T rates

After the Direct Taxes Code (DTC) Bill is approved by Parliament, it may bring with it major relief for personal income tax payers. Finance Minister P Chidambaram informed that at a press conference that when the final version of the Bill was tabled in Parliament, the government would abide by the recommendations of the parliamentary standing committee on DTC.

The Parliamentary Standing Committee on DTC, headed by senior BJP leader Yashwant Sinha, in its report had given a number of recommendations, including raising income tax exemption limit to Rs 3 lakh. The current exemption limit for individuals is Rs 2 lakh. The panel also suggested a 10 per cent income tax rate be applicable for annual income of Rs 300,000 to Rs 10 lakh. Currently 10 per cent income tax is imposed on the Rs 2-5 lakh slab. The panel also suggested 20 per cent income tax be paid by those earning Rs 10-20 lakh. It also wanted the government to impose a peak rate of 30 per cent on annual income of more than Rs 20 lakh, against the Bill's provision of more than Rs 10 lakh.

Substantial changes in tax exemptions on long-term savings, medical insurance and social security contributions were also suggested by the committee. It recommended contribution to social security such as pension be exempted up to Rs 150,000 a year; medical insurance up to Rs 100,000; medical insurance for dependent parents up to Rs 50,000 and professional studies and education Rs 50,000.

Other recommendations of the panel on DTC Bill include hiking the investment limit for tax savings schemes to Rs 3.20 lakh and pegging wealth tax limit at Rs 5 crore.


Initially, DTC was scheduled to be introduced from April 1. However, the standing committee had submitted its report to Parliament only in March.

The government would now table the revised DTC Bill in Parliament.