Cabinet approves Direct Taxes Code
It is proposed to provide the EEE (Exempt-Exempt-Exempt) method of taxation for Government Provident Fund (GPF), Public Provident Fund (PPF) and Recognised Provident Funds (RPF). Under the EEE mode, the tax exemption is enjoyed at all the three stages – investment, accumulation and withdrawal.
The revised draft also puts pensions administered by the interim regulator PFRDA, including pension of government employees who were recruited since January 2004, under EEE treatment.
No Tax up to Rs.2 Lakhs for Salaried Class,
Rs.2.5 Lakhs for Senior Citizens Likely to be effective from April, 2012
The Cabinet has cleared the Direct tax code and it has been introduced in Rajya Sabha, which has referred it to a select committee, during the monsoon session.
The new provisions under the Direct Tax Code are as follows:
• Tax for income between Rs. 2 lakh – Rs. 5 lakh: 10%
• Tax for income between Rs. 5 lakh – Rs. 10 lakh: 20%
• Tax for income over Rs. 10 lakh: 30%
• The limit for exemptions for salaried people is Rs. 2 lakh, while that for senior citizens it is Rs. 2.5 lakh.
• Corporate tax has been kept at 30%. • The new Code comes into effect from April, 2011.
• Proposal has also made it clear that tax incentives on housing loans will continue, Payment on interest on housing loans up to Rs. 1.5 lakh will continue.
After the approval of the Cabinet, the decks are cleared for tabling the legislation in the Monsoon Session of Parliament so that the new Act ushering in reduced tax rates and exemptions may come into effect from next fiscal.