Now tax payers have to pay less taxes. Cabinet finally cleared the DTC or Direct tax code to replace the old income tax system that we are using from half century. The bill will be introduced in Rajya Sabha, and referred it to a select committee, during the monsoon session. DTC will be effected from April, 2011.
This tax system will free many people from chartered accountants
The new provisions under the DTC are -
- Tax for income between Rs. 2 lakh – Rs. 5 lakh: 10%
- Tax for income between Rs. 5 lakh – Rs. 10 lakh: 20%
- Tax for income over Rs. 10 lakh: 30%
The limit for exemptions for salaried people is Rs. 2 lakh, while that for senior citizens is Rs. 2.5 lakh. Corporate Tax is 30%.
The monsoon session concludes Monday and the winter session is likely to begin in mid-November.
According to Mukherjee, direct taxes were now a major resource provider to the government and had grown at an average rate of 24 percent per annum in the past five years, trebling from Rs.132,771 crore in 2004-05 to about Rs.378,000 crore in the previous fiscal.
‘To improve compliance further, tax laws need to be simple, stable and robust. Tax rates should remain moderate. Multiplicity of tax exemptions and deductions must be gradually phased out in order to widen and deepen the tax base,’ Mukherjee said.
The share of such taxes has also increased from 4.1 percent to 6.1 percent of the gross domestic product (GDP), which was made possible by rationalization of tax structure and improvement in administration that led to better tax compliance.