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The much expected Revised Tax Code Proposal was released by Government yesterday. It was informed by the Govt that the comments and suggestions of stakeholders and citizens in respect of New Tax Code proposals released by the Government during August 2009 were taken into account the revised tax code proposal is now prepared and published for public opinion.
We can go through the features of Revised Tax code in the Ministry of Finance website.
Express your suggestions and comments in the Comments page in website of Ministry of Finance created for this purpose on or before 30th June, 2010.
Changes Proposed on taxation in respect of retirement benefits:
The Major policy revision proposed in the Revised Tax Code Proposal is tax treatment of savings – Exempt Exempt Tax (EET) vis-a-vis Exempt Exempt Exempt (EEE) basis proposed in the earlier proposal.
With regard to Taxation on income from House Property also the revised Tax Code Proposal has been formulated after taking in account the concerns of salaried class that interest on housing loan should be allowed to be deducted from the total income even if the house property is self occupied. This demand has been accepted by the Government to the extent that the housing loan interest is deductible ( maximum limit is Rs. 1.5 lakhs) in the case of any one self occupied property.
Modifications proposed in the revised Tax code proposal in respect of House property:
(a) In case of let out house property, gross rent will be the amount of rent received or receivable for the financial year.
(b) Gross rent will not be computed at a presumptive rate of six per cent of the rateable value or cost of construction/acquisition.
(c) In case of house property which is not let out, the gross rent will be nil. As the gross rent will be taken as nil, no deduction for taxes or interest etc., will be allowed. However, in case of any one house property, which has not been let out, an individual or HUF will be eligible for deduction on account of interest on capital borrowed for acquisition or construction of such house property (subject to a ceiling of Rs. 1.5 lakh) from the gross total income. The overall limit of deduction for savings will be calibrated accordingly.
The other major issues which have been addressed relate to Minimum Alternate Tax (MAT) on gross assets, , status of Double Tax Avoidance Agreements vis-a-vis the domestic law, the administration of the General Anti-avoidance Rule (GAAR), tax treatment of capital gains and tax treatment of non-profit organizations, etc.
The Government also said that it will introduce a draft legislation on the Direct Taxes Code (DTC) after taking into considerations the public opinion on this revised Tax Code, which would be placed in in Parliament in the forthcoming monsoon session.
“If Parliament procedure is complete and it becomes a law, it will be implemented from April 1, 2011,” Revenue Secretary Sunil Mitra told reporters after releasing the revised DTC draft.