People with more than Rs 10 lakh annual income may not get the tax relief originally proposed in the Direct Taxes Code, as the Finance Ministry is for tweaking slabs across the board to offset concessions elsewhere.
Under the first draft of DTC — which when implemented will replace the archaic Income Tax Act, 1961 — income of Rs 10 lakh to Rs 25 lakh was to attract tax at the rate of 20 per cent, but the final draft expected by June 15 may propose slapping 30 per cent tax on any income above Rs 10 lakh per annum, according to sources.
This is to make up for the possible concessions the ministry may extend in other areas like exempting long term savings from tax at the time of withdrawal and the way Minimum Alternate Tax is calculated, sources said.
As such, the relief on highest tax slab would not be much, since under the present regime too, 30 per cent tax is imposed on income of more than Rs eight lakh a year.
Sources said the ministry is reworking the August 2009 draft following feedback from stakeholders. Under this, the 10 per cent tax proposed on income up to Rs 10 lakh may now stand scaled down to Rs five lakh a year.
And income of Rs five-10 lakh a year would attract 20 per cent tax, although the first draft proposed slapping this rate on Rs 10-25 lakh income.
However, the threshold level of income that is exempt from tax may be raised to Rs two lakh from Rs 1.6 lakh at present. The first draft had proposed retaining the threshold limit at Rs 1.6 lakh.
Sources said the government has to generate tax revenue for meeting its expenses and it might yield to the “genuine” demand of MAT being imposed on book profits rather than on gross assets as suggested in the first draft.
“Gross assets also include the debt portion of a company and it is highly illogical to tax debt,” said a source.
MAT is a tax imposed on profit making companies who do not fall under any tax because of various exemptions.
Further, the ministry might also agree to retain the current provision of following exempt-exempt-exempt (EEE) model for long term savings like provident fund and pension, instead of changing to exempt-exempt-tax (EET). EET model implies that tax would be imposed on long term savings at the time of withdrawal.
On tax exemptions on home loans, on which the first draft is completely silent, sources said that there might be no rebates in the second draft as well, since the individual tax exemption limit on savings like insurance and others is proposed to be hiked to Rs three lakh from the current Rs one lakh.
“This more than compensates” for doing away with tax rebates on the housing loans, the source said.
In our country we pay 90 percent of our earnings in taxes. When we buy we pay tax, we pay service tx, we pay professional taxes, we pay sales tax for our biscuits and eatables. we pay tax for drinking water and if we die we pay death tax. But the government swindles money in Sports, telecommunication, and all. Actually we are to earn for our tax alone. If we earn Rs 400,000 per annum the rent we pay Rs 1,40,000, Medicine Rs 40,000 provisions 72,000, school fees for children 100,000/ per child, Transport Rs 56,000 and we need money to pay tax. On the otherhand the ministers and higher officials evade tax and put arrears in billions and trillions and deposit in Foreign banks. The curses of innocents will destro the ruling parties and they are answerable to God.
The Defination of a Senior Citizen when comes for income tax purpose is 65 years and when it is related to other departments including Banks is 60 years. I fail to understand as to why the age of 60 years can not be considered for income tax. A senior citizen start facing problems to meet his and family obligations the moment he is retired; the why government decides to let him wait up to 65 years to get concessions. This issue if resolved will help lakhs of Senior Citizens without affecting much on the revenue of government.