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.
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.
