Cabinet likely to consider Direct Taxes Code Bill tomorrow: Economic Times
NEW DELHI: The Cabinet is likely to consider tomorrow the Direct Taxes Code (DTC) Bill, which seeks to overhaul the over 50-year old income-tax law, with minor rejigs in the draft, including in the income-tax slabs.
“The DTC Bill is on the agenda of the Cabinet meeting tomorrow,” a source said.
The exemption limit at Rs 2 lakh for individual tax payers is unlikely to be touched, but a new slab of 35 per cent may be introduced for the super-rich.
Besides, Minimum Alternate Tax (MAT) may be levied on book profit and not on gross assets, sources said. Further, the Securities Transaction Tax (STT) is likely to be retained, as against the recommendation of the Standing Committee on Finance that the levy be abolished.
Among other things, the Standing Committee, headed by senior BJP leader Yashwant Sinha, had suggested raising the income-tax exemption limit to Rs 3 lakh from Rs 2 lakh proposed in the DTC Bill, 2010.
The DTC bill, which aims to rationalise tax rates to bring more people and companies under the tax net, was introduced in Parliament in 2010.
Finance Minister P Chidambaram had earlier said he intends to bring the DTC Bill in the Monsoon session of Parliament, following submission of the Standing Committee’s recommendations. The ongoing Monsoon session is scheduled to end on August 30.
The first draft prepared by Chidambaram in 2009 had proposed an income-tax slabs of Rs 1.6-10 lakh, Rs 10-25 lakh and Rs 25 lakh and above. Besides, corporate tax was proposed at 25 per cent.
This was followed by the draft DTC Bill prepared by then-Finance Minister Pranab Mukherjee in 2010, which proposed the slabs at Rs 2-5 lakh, Rs 5-10 lakh and Rs 10 lakh and above and corporate tax at 30 per cent.
The Standing Committee suggested slabs of Rs 3-10 lakh, Rs 10-20 lakh and Rs 20 lakh and above. On corporate tax, it recommended the rate be retained at 30 per cent.
The finance ministry is learnt to have accepted more than 150 of the 190 recommendations of the committee, headed by BJP leader Yashwant Sinha. Finance Minister P Chidambaram has broadly gone with the 2010 version of the Bill, tabled in Parliament by his predecessor Pranab Mukherjee, instead of reverting to his own version of 2009. This means taxpayers might continue to enjoy exemption on maturity of some of their investments and industry could pay Minimum Alternate Tax (MAT) on book profits, instead of gross assets.
Some of the provisions of the DTC Bill, such as the General Anti-Avoidance Rules and Advance Pricing Agreements, have already been incorporated in the Income Tax Act.
When enacted, the DTC Bill, one of the two major tax reforms — the other one being Goods and Services Tax — will replace the Income Tax Act of 1961.
BREAKING THE CODE
The amendments to the DTC Bill, 2010, that Cabinet may consider
35%: A higher income-tax rate for those earning more than Rs 10 cr a year
Rs 2 lakh: The current exemption limit might be retained
DDT: Additional dividend distribution tax on dividend income of over Rs 10 crore
Fast-track courts: For black-money cases
Settlement commission: Body to resolve tax disputes may be done away with
Threshold: Indirect-transfer shares on which capital gains tax is to be imposed may be defined
Exemption: That from tax on maturity of some long-term saving instruments may continue
MAT: May be retained on book profits, instead of gross assets