Budget 2012: Will tax slab relief go up to Rs 3 lakh?

In an important advent for the direct advent code, BJP leader Yashwant Sinha-headed parliamentary standing committee on finance will meet today to finalise its report on the Code Bill, which seeks to replace the old income tax law.

The draft report  suggests increasing the income tax exemption limit to Rs 3 lakh a year against Rs 2 lakh proposed in the Bill.Tax rates the committee is expected to propose are 10 percent for the slab of Rs 3 lakh to Rs 10 lakh, 20 percent for up to Rs 20 lakh and 30 percent  beyond that, reports   Times of India.   It proposes to tax net wealth exceeding Rs 10 crore at the rate of 1 percent. Currently, income of Rs 1.80-5 lakh attracts 10 percent income tax, Rs 5-8 lakh 20 percent and above Rs 8 lakh 30 percent. Moreover ,the direct taxes code proposes to reduce the tax eligible time period of residency allowed to NRIs, which is currently at 182 days. It proposes to reduce it to 60 days.

With the standing committee expected to give its report in the upcoming Budget session, Direct Taxes Code could very much become a part of Budget 2012 which is to be presented on 12 March. However, the Direct Tax Code may not be implemented from April 1, 2012 but only from April 1, 2013.

Apart from further widening of income tax slabs, lowering of wealth tax threshold and anti-abuse provisions with riders to ensure that taxmen don’t get discretionary powers to harrass taxpayers, the biggest take away for India Inc would be the proposed flat 15 percent rate of dividend distribution tax.

In addition,changes in tax benefits for life insurance products are also being considered by the panel with benefits being enhanced in comparison to the bill’s proposals. It has  suggested that all insurance policy dividends should be be exempted from dividend distribution tax and that there be no tax deducted at source (TDS) on stock market brokerage fees, which are paid for such transactions.

More importantly it agrees with the direct taxes code proposal to levy a minimum alternative tax on SEZs, reports CNBC TV 18.

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