Concerned over Rs 38,000 crore in tax revenue being locked up in legal disputes, Finance Minister Pranab Mukherjee today asked the authorities to step up efforts to realise the taxes. “Rs 28,046 crore is blocked in appeal before CIT (Appeal) and Rs 10,010 crore before Income Tax Appellate Tribunal (ITAT),” Mukherjee said after meeting Revenue Department officials here.
A Parliamentary Standing Committee has recommended raising the limit of donations a company can make to the political parties in a year from 5 per cent to 7.5 per cent of the average net profits in three immediate past financial years.
Advanced economies must pursue long-term policy reforms to reduce public debt levels over the coming decades and ensure future fiscal sustainability, according to three papers published today by the International Monetary Fund (IMF). In order to protect the fragile economic recovery, support growth and job creation and provide reassurance to capital markets, fiscal adjustment plans must be clearly defined—but with a focus on the medium term rather than seeking a quick fix.
Monday’s announcement of the new Direct Taxes Code (DTC) proposals is among the two far-reaching reforms that will help India sustain high growth rates. For the capital markets, the Bill is positive, says Rakesh Arora, associate director, Macquarie Research. “Lower tax liability for companies at about 10 per cent and no changes in capital gains tax for foreign institutional investors (FIIs) are beneficial for the capital markets and ensure greater investor interest.”
The Life Insurance Corporation of India has made a strong case for continuing tax breaks on life insurance policies bought with an investment objective. Referring to the Direct Tax Code proposal that extends tax-breaks to only those policies that have a sum insured of at least 20 times the premium paid, LIC chairman TS Vijayan said the important thing was that life insurance investments were long-term and protection-oriented.
If the Direct Taxes Code Bill does not undergo further changes, employees in the lower tax bracket will get more retirement benefits, provided they opt for a higher basic salary. “Contributions made towards retirement benefits are linked to the basic salary. And the Bill has removed the existing cap on employers’ contribution towards the superannuation fund,” says Mayur Shah, associate director, Ernst & Young.
Sale proceeds of carbon credits will not escape tax when the new Direct Taxes Code comes into effect from April 1, 2012. This is because the DTC Bill 2010 has explicitly stated that money received or receivable from transfer of carbon credits will be treated as business income and taxed accordingly. Such a provision if enacted will remove the current uncertainty surrounding the taxation of carbon credits, say tax experts.
Notification No. 70/2010-Income Tax In exercise of the powers conferred by sub-sections (1) and (2) of section 120 of the Income-tax Act, 1961 (43 of 1961) the Central Board of Direct Taxes hereby makes the following amendments to the notification of the Government of India, in the Ministry of Finance (Department of Revenue), (Central Board of Direct Taxes) number S.O. 881(E), dated the 14th September, 2001
TAXATION OF EMPLOYMENT INCOME AND DEDUCTIONS: There is an increase in exemption limit for medical reimbursement from Rs 15,000 to Rs 50,000. On making contributions to any approved fund for himself/spouse/child, an individual is allowed a deduction of up to Rs 100,000 from his taxable income. A further deduction of up to Rs 50,000 in aggregate is allowed for contributions to specified life insurance/health insurance plans or incurring tuition fees for children.
Even if assessee has disclosed nil income and on verification of the record, it is found that certain income has been concealed or has wrongly been shown, in that case, penalty can still be levied.
