DTC (Direct Tax Code) - No exemption for LTC

How to control low blood pressure OR hypo tension

The Direct Taxes Code (DTC) bill, which was tabled in the Lok Sabha yesterday, seeks to do away with leave travel concession (LTC) from its list of exemption. "LTC was one of the popular elements given to employees by the government. Taxpayers will not be too happy, as already there aren't many benefits for them in DTC.

10 ways to build self-confidence

It may also be a dampener for the travel industry, which may see less people willing to travel and holiday," Ernst & Young Tax Partner Vishal Malhotra said. DTC aims to replace the archaic Income Tax Act and other direct taxes legislation like Wealth Tax Act, from April 1, 2012. It proposes, among other things, to remove a plethora of exemptions and effect changes in income tax slabs.


While DTC proposes to retain exemptions such as house rent allowance and leave encashment, it seeks to remove LTC from the list. The exemption limit for medical reimbursements, however, is sought to be increased.


The Government has also proposed only a marginal raise in income tax exemption for investment in approved funds, insurance schemes and tuition fee to Rs 1.5 lakh in a year, from Rs 1.2 lakh currently. It seeks to provide income tax exemption on investment of up to Rs 1 lakh in approved funds. Besides, it proposes to provide exemption of up to Rs 50,000 on investments made in insurance, including health cover, and tuition fee. Currently, investment up to Rs 1 lakh in approved funds and insurance schemes is exempt from income tax. For this fiscal, investment up to Rs 20,000 in infrastructure bonds have also been given this benefit.


The exemptions proposed in the DTC bill are much lower than Rs 3 lakh suggested in the first draft. This is so because the bill proposes to retain Income Tax exemption on interest up to Rs 1.5 lakh a year paid on housing loan, tax experts said. The first draft was silent on exemption for interest paid on housing loans. However, after adverse feedback from various quarter, the second draft proposed to retain this exemption, which is also incorporated in the bill

Don't Download any thing before free Registration for Job Alerts on the TOP of this site and check your Inbox for clicking on activation link of Feed Burner.

Major Highlights of Union Budget 2011-12

Finance minister Pranab Mukherjee on Monday presented to Parliament India's budget for the coming financial year beginning in April.

(Read full Story on Budget 2011-12)

Following are the highlights of the budget:

TAXES

 
* Standard rate of excise duty held at 10 percent; no change in CENVAT rates
* Personal income tax exemption limit raised to Rs 180,000 from Rs 160,000 for individual tax payers
*For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh.
*Citizens over 80 years to have exemption limit of Rs 5 lakh.
* To reduce surcharge on domestic companies to 5 percent from 7.5 percent.
* A new revised income tax return form 'Sugam' to be introduced for small tax papers.
* To raise minimum alternate tax to 18.5 percent from 18 percent
* Direct tax proposals to cause 115 billion rupees in revenue loss
* Service tax rate kept at 10 percent
* Customs and excise proposals to result in net revenue gain of 73 billion rupees
* Iron ore export duty raised to 20 percent
*Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted.
*Peak rate of customs duty maintained at 10 per cent in view of the global economic situation.
*Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent.
*Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests.
*Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes, it will be ten per cent flat.
* Electronic filing of TDS returns at source stabilised; simplified forms to be introduced for small taxpayers.
* Works of art exempt from customs when imported for exhibition in state-run institutions; this now extended to private institutions.

SUBSIDIES
* Subsidy bill in 2011-12 seen at 1.44 trillion rupees
* Food subsidy bill in 2011-12 seen at 605.7 billion rupees
* Revised food subsidy bill for 2010-11 at 606 billion rupees
* Fertiliser subsidy bill in 2011-12 seen at 500 billion rupees
* Revised fertiliser subsidy bill for 2010-11 at 550 billion rupees
* Petroleum subsidy bill in 2011-12 seen at 236.4 billion rupees
* Revised petroleum subsidy bill in 2010-11 at 384 billion rupees
* State-run oil retailers to be provided with 200 billion rupee cash subsidy in 2011-12

FISCAL DEFICIT
* Fiscal deficit seen at 5.1 percent of GDP in 2010-11
* Fiscal deficit seen at 4.6 percent of GDP in 2011-12
* Fiscal deficit seen at 3.5 percent of GDP in 2013-14 (Read full Story on Budget 2011-12)
SPENDING
* Total expenditure in 2011-12 seen at 12.58 trillion rupees
* Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3 percent

REVENUE
* Gross tax receipts seen at 9.32 trillion rupees in 2011-12
* Non-tax revenue seen at 1.25 trillion rupees in 2011-12
* Corporate tax receipts seen at 3.6 trillion rupees in 2011-12
* Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8 percent in 2012-13
* Customs revenue seen at 1.52 trillion rupees in 2011-12
* Factory gate duties seen at 1.64 trillion rupees in 2011-12
*Service tax receipts seen at 820 billion rupees in 2011-12
* Revenue gain from indirect tax proposals seen at 113 billion rupees in 2011-12
* Service tax proposals to result in net revenue gain of 40 billion rupees in 2011-12

GROWTH, INFLATION EXPECTATIONS
* Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent
* Inflation seen lower in the financial year 2011-12

DISINVESTMENT
* Disinvestment in 2011-12 seen at 400 billion rupees
* Government committed to retaining 51 percent stake in public sector enterprises.

BORROWING
* Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from 3.45 trillion rupees in 2010-11
* Gross market borrowing for 2011-12 seen at 4.17 trillion rupees
* Revised gross market borrowing for 2010-11 at 4.47 trillion rupees

POLICY REFORMS
* To create infrastructure debt funds
* FDI policy being liberalised.
* To boost infrastructure development with tax-free bonds of 300 billion rupees
* Food security bill to be introduced this year
* To permit SEBI registered mutual funds to access subscriptions from foreign investments
* Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion
* Setting up independent debt management office; Public debt bill to be introduced in parliament soon
* Bills on insurance, pension funds, banking to be introduced.
*Constitution Amendment Bill for introduction of GST regime in this session.
*New Companies Bill to be introduced in current session

SECTOR SPENDING
* To allocate more than 1.64 trillion rupees to defence sector in 2011-12
* Corpus of rural infrastructure development fund raised to 180 billion rupees in 2011-12
* To provide 201.5 billion rupees capital infusion in state-run banks in 2011-12
* To allocate 520.5 billion rupees for the education sector. Rs.21,000 crore for Sarva Shiksha Abhiyan. 

* To raise health sector allocation to 267.6 billion rupees
* Rs.500 crore more for national skill development fund.
* Rs.54 crore each for AMU (Aligarh Muslim University) centres at Murshidabad and Mallapuram.
* Rs.58,000 crore for Bharat Nirman; increase of Rs.10,000 crore.
* Mahatma Gandhi National Rural Employment Guarantee Scheme wage rates linked to consumer price index; will rise from existing Rs.100 per day.
* Increased outlay on social sector schemes.
* Infrastructure critical for development; 23 percent higher allocation in 2011-12. (Read full Story on Budget 2011-12)
AGRICULTURE
* Removal of supply bottlenecks in the food sector will be in focus in 2011-12
* Agriculture growth key to development: Green Revolution waiting to happen in eastern region.
* To raise target of credit flow to agriculture sector to 4.75 trillion rupees
* Gives 3 percent interest subsidy to farmers in 2011-12
* Cold storage chains to be given infrastructure status
* Capitalisation of National Bank for Agriculture and Rural Development (NABARD) of 30 billion rupees in a phased manner
* To provide 3 billion rupees for 60,000 hectares under palm oil plantation
* Actively considering new fertiliser policy for urea
* Food storage capacity to be augmented - 15 more mega food parks to be set up in 2011-12; of 30 sanctioned in previous fiscal, 15 set up.
* Comprehensive policy on further developing PPP (public-private-partnership) model.
* Farmers need access to affordable credit.
* Moving to improve nutritional security.
* Necessary to accelerate production of fodder.

ON THE STATE OF THE ECONOMY
* "Fiscal consolidation has been impressive. This year has also seen significant progress in those critical institutional reforms that will pave the way for double digit growth in the near future."
* "At times the biggest reforms are not the ones that make headlines, but the ones concerned with details of governance which affect the everyday life of aam aadmi (common man). In preparing this year's budget, I have been deeply conscious of this fact."
* Food inflation remains a concern
* Current account deficit situation poses some concern
* Must ensure that private investment is sustained
* "The economy has shown remarkable resilience."
* Setting tone for newer, vibrant economy.
* Economy back to pre-crisis trajectory.
* Development needs to be more inclusive.

ON GOVERNANCE
* "Certain events in the past few months may have created an impression of drift in governance and a gap in public accountability ... such an impression is misplaced."
* Corruption is a problem, must fight it collectively

MORE
*Govt to move towards direct transfer of cash subsidy for kerosene, LPG and fertilisers.
*Financial Sector Legislative Reforms Commission, to be headed by former Supreme Court judge B Srikrishna, to complete its work in 24 months; to overhaul financial regulations.
* Five-fold strategy against black money; 13 new double taxation avoidance agreements; foreign tax division of CTBT strengthened; strength of Enforcement Directorate increased three-fold.
* Bill to be introduced to review Indian Stamp Act.
* New coins carrying new rupee symbol to be issued.
* Anganwadi workers salary raised from Rs.1,500 to Rs.3,000.
* Mortgage risk guarantee fund to be created for economically weaker sections.
* Housing loan limit for priority sector lending raised to Rs.25 lakh. 

(Read full Story on Budget 2011-12) 

Don't Download any thing before free Registration on the TOP of this site and check your Inbox for clicking on activation link of Feed Burner.

Direct Tax Code effect on Taxation and on Salaried Persons

Friends,

The long awaited DTC has finally been put into it’s much talked about structure and framework. The expected Direct Tax Code, or otherwise known as DTC is the replacement version of Income Tax Act that charges the taxability of the individuals and corporate. The DTC is expected to come into the picture of taxation from April 1, 2012. An attempt has been made to analyze the impact which it is likely to have on the salaried class.

The proposed model of DTC was expected to bring about a radical change in the personal taxation slabs and exemptions but however the present scenario appears to be very different. The proposed change is expected in respect tax slab has been done away with, that is, the same tax slab is expected to be for the both the gender, men and women respectively. Added to it, the tax exempt savings have been also recasted. According to the present context, the income tax system offers assesses a yearly deduction of Rs. 1, 00, 000 under the section 80C of the Income Tax Act. According to the Income Tax Act, section 80C includes deductions in respect of expenditure made by an assessee by way of Public Provident fund (PPF) which amounts to Rs. 70, 000, Provident fund (PF), NPS and ELSS. Added to it, there are also other areas under this section which covers areas like payment of premium for pure life insurance or otherwise known as ULIP, payment of principal amount of home loan, NSC, Fixed deposits having a minimum maturity period of five years. Considerations for payment of tuition fees for full time education for up to 2 children have also been kept in the purview of this section.

Other section like 80D gives an additional deduction of Rs. 15, 000 in respect of medical allowance. A certified class of notified infrastructure bonds can also be helpful in providing additional deduction of Rs. 20, 000 under the section 80CCf of the act.

The new story under the DTC has raised the level of annual deduction by making the available deduction in respect of computation of income to Rs. 1, 50, 000. According to the available information it has been observed that investments in public provident fund (PPF), provident fund (PF), NPS and pure life insurance policies would come under the deduction category of EEE. The respective section of EEE in respect to the proposed Direct Tax Code (DTC) relates to tax exemption which shall be given to the assesses when they invest a particular kind of investment which relates to accumulation and withdrawal of particular specified securities as prescribed by the tax department. But unfortunately, the benefit of principal repayment in context to payment of existing home loans has been abolished which means that such category shall not be eligible for claiming deduction.

Thus, in light of the above mentioned facts on can say that the DTC has though lifted the amount of deduction which shall be available to assesses but on the other hand the deduction for repayment has been done away with. Therefore, salaried class of people should make a wise consideration before investing funds.

Download Available Direct Tax code Bill tabled in Lok Sabha

Friends,

Highlights of The New direct Tax code is given below

1. Tax exemption Limit enhanced for Individuals to 200000
2. For senior Citizen limit is 250000.
3. There is no addition limit for Women.
4. 200000-500000=10% ,500000-1000000=20% and more than 1000000 30 %
5. Company tax rate is 30%
6. There is no cess and surcharge new direct tax code
7. MAT(minimum alternative tax ) proposed at 20% present rate is 18% plus cess and surcharge
8. Capital gain Long term is now from asset hold more than one years.
9. Indexation Base year to be changed to 01.04.2000 from 01.04.1981 so no tax on gains realised between 1981 to 2000.
10. Tax applicable on capital gain from long term sale of securities ,presently it is exempted.
11. Proposed applicable date is 01.04.2012 (FY 2012-13)
12. The Government has also proposed to restore back the taxation of retirement savings, in the nature of provident fund contributions and pure life insurance and annuity products, to the Exempt-Exempt-Exempt scheme from the earlier proposition of Exempt-Exempt-Tax scheme under the revised discussion paper in the DTC
    
13. No Tax on Long term capital gain on securities & equity linked mUtual funds,For short term capital gain tax rate is 50 % of normal slab rate applicable to the asseessee.
14. in case of short term assets, there is no relaxation to the tax payer and tax will be required to paid as in case of any other ordinary income
    
15. The code introduces a Rs 50,000 enhanced deduction for savings in addition to old 100000 deduction.
16. Interest on house loan benefit continues ,HRA benefit also have a place in DTC .
    

You may download the Direct Tax code Bill from Link given below .

Download Direct tax code Bill as introduced in LokSabha On 30.08.2010

The government on Monday introduced in Parliament a bill to overhaul its archaic direct tax codes, a key reform aimed at simplifying procedures for investors and bring in more revenue by widening the tax net.

This switchover to DTC with higher exemption limits and lower corporate tax, Revenue Secretary Sunil Mitra says, will cost the government a revenue loss of Rs 53,172 crore on reduced rates and a loss of Rs 38,829 crore in the first year from corporate tax rate. “India's direct tax collection for 2011-12 is expected to be at Rs 5.27 lakh crore in the first year, if current rates hold,” he adds.The bill proposes to cut tax rates, replace profit-linked exemptions for companies with investment-linked incentives and simplify rules on corporate mergers, aimed at creating a tax code that can support growth in Asia's third-largest economy.

The dividend distribution tax (DDT) for holding companies has been removed up to any level and the securities transaction tax (STT) rate has been kept same at 0.25%. The new code would also scrap cess and surcharge.

The bill will now be applicable from April 1, 2012, instead of the earlier proposed March 1, 2011. This delay, Mitra says will allow time for switchover.