The government will come up with a modified Direct Taxes Code (DTC) Bill after incorporating the suggestions of the Standing Committee on Finance, which among things had suggested raising annual income tax exemption limit to Rs 3 lakh.

10. Threshold limit for TDS: The present section 194J provides an exemption limit or threshold limit for TDS for professional fees and royalty/non-compete fees, but this limit seems to be absent under clause 200(A) (o), which could be very cumbersome for small amounts of these specific services.

The Direct Taxes Code Bill, 2010 which intends to revamp the law relating to direct taxes is likely to result in considerable unacceptable losses on a continuing basis. Given the low tax-GDP ratio and the existing fiscal crisis, there is absolutely no fiscal space for such large revenue loss. Therefore, the Direct Taxes Code Bill, 2010 should be comprehensively reviewed before it is enacted into law for implementation.

On the changes suggested by the panel in the DTC, Mukherjee said two recommendations, General Anti Avoidance Rule (GAAR) and Advance Pricing Agreement (APA), have already been proposed in the Budget 2012.

1) The Exemption limit for the general category of individual taxpayers enhanced from Rs. 1,80,000 to Rs. 2,00,000 giving uniform tax relief of Rs.2,000. Further, slab of 20% proposed to increase from 8,00,000 to 10,00,000. It is in line with DTC. 2) In another relief to the individual taxpayers, a deduction of up to Rs. 10,000 has been proposed for interest from savings bank accounts. This would help a large number of small taxpayers with salary incomes upto Rs. 5 lakh and interest from savings bank accounts upto Rs. 10,000 as they would not be required to file income tax returns.

The Union Finance Minister ShriPranab Mukherjee today expressed firm commitment to enact the Direct Taxes Code (DTC) Bill at the earliest, after expeditious examination of the report of the Parliamentary Standing Committee. The Bill was introduced in Parliament in August 2010, and was to come into force from April 1 this year. However, the timeline could not be adhered to as the report of the Parliamentary Standing Committee on the matter was received only on March 9 this year.

Raise I-T exemption limit to Rs 3 lakh from Rs 1.8 lakh. Levy 10 pc tax on income between Rs 3-10 lakh. 20 pc on income between Rs 10-20 lakh,30 pc above Rs 20 lakh. Senior citizen benefits from 60 years instead of 65 years. Raise tax rate on life insurance cos to 15 pc from 12.5 pc. Retain corporate tax rate at 30 pc. Remove Securities Transaction Tax (STT). Hike tax savings schemes limit to Rs 3.2 lakh,from Rs 1.8 L. Raise wealth tax limit to Rs 5 crore from Rs 30 lakh.

The committee, according to sources, wants the government to raise the income tax exemption limit to Rs 3 lakh in view of the near double-digit inflation which has eroded purchasing power of rupee. The Bill has a provision to raise the limit to Rs 2 lakh. Currently, income of Rs 1.80-5 lakh attracts 10 per cent income tax, Rs 5-8 lakh 20 per cent and above Rs 8 lakh 30 per cent.

Terming as landmark the process adopted for finalising the Direct Taxes Code (DTC), Plan Panel Deputy Chairman Montek Singh Ahluwalia said he is not in favour of referring legislative Bills to ‘expert groups’.

Reeling under the impact of global slowdown and a high interest rate regime, India Inc on Monday demanded that tax rates be retained at existing levels even as finance minister Pranab Mukherjee expressed concerns about challenges facing the economy.In their customary pre-Budget meeting with Mukherjee, industry leaders also demanded that healthcare services be kept outside service tax ambit, and privatise coal mines.