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Revised DTC to allow Income Tax Exemption for income up to Rs. 3 lakh

Finance Minister’s advisor indicates that as per Revised DTC Income Tax Exemption will be allowed for income up to Rs. 3 lakh as per Revised DTC

Advisor to Finance Minister Mr.Parthasarathi Shome informed that Government might come up with a revised Direct Tax Code on the basis of suggestions of Parliamentary Panel chaired by Shri.Yashwant Sinha, a BJP Leader.

As per the proposed revision, Income Limit for full exemption from Income Tax will be Rs. 3 lakh.

Economic times reports about this revision of DTC as follows.

The government will come up with a modified Direct Taxes Code (DTC) Bill after incorporating the suggestions of the Standing Committee on Finance, which among things had suggested raising annual income tax exemption limit to Rs 3 lakh.

"Will come out with modified DTC (Bill) in response to Standing Committee suggestions," said Advisor to the Finance Minister Parthasarathi Shome at a FICCI event here.

He said the Finance Ministry is looking at the Bill and working on tax structures as suggested by the Parliamentary committee.

The Parliamentary panel headed by senior BJP leader Yashwant Sinha in its report (March 2012) had suggested raising the annual income exemption tax limit to Rs 3 lakh as against Rs 2 lakh proposed in the original DTC Bill.

It has also suggested that subsequent tax slabs be adjusted accordingly to provide relief to people reeling under the impact of inflation. The DTC will eventually replace the over five decades old Income Tax Act.

"We are trying to see what could be the best in terms of transparency so that issues that are hurting industry could be covered adequately," Shome said.

He further said the Finance Ministry is also addressing the issue of expenditure control and that remains a major challenge.

"We are looking into expenditure efficiency. We should do more in terms of efficiency. Issues on expenditure side is being addressed. Expenditure control is a major challenge and is being addressed by the Finance Minister," he said.

The DTC Bill, tabled in August 2010, was referred to the Standing Committee for scrutiny.

Shome also said there has been some improvement on the government’s non-plan expenditure side since the time of financial crisis in 2008.

Finance Minister P Chidambaram had in November 2012 announced a fiscal consolidation road map wherein he plans to restrict fiscal deficit at 5.3 per cent of GDP in the current fiscal and bring it down to 3 per cent by 2016-17.

Shome further said that the government is showing its intention to bring in clarity in tax laws and reforms in tax administration.

"We have to increasingly do so (tax reforms). That is going to be a vehicle and we won’t put it on back burner," Shome said.

He also said the Ministry has asked National Institute of Public Finance and Policy (NIPFP) to calculate the impact of the proposed Goods and Services Tax (GST) on the GDP.

Source: Economic Times