DTC Panel: Income tax exemption limit be raised to Rs 3 lakh per annum

Ahead of the Budget, a Parliamentary panel that scrutinised the Direct Taxes Code (DTC) Bill has suggested that income tax exemption limit be raised to Rs 3 lakh per annum, and the investment limit for tax savings schemes be hiked to Rs 3.20 lakh.

In its report, which was submitted to the Lok Sabha Speaker Meira Kumar today, the Standing Committee on Finance suggested that the wealth tax limit be pegged at Rs 5 crore, while the Securities Transaction Tax (STT) be abolished.

As regards the corporate tax, the Committee, which is headed by senior BJP leader and former Finance Minister Yashwant Sinha, recommended that the rate be retained at 30 per cent.

The report will pave the way for debate and passage of the DTC Bill, which seeks to replace the Income Tax Act, 1961, by Parliament.

Besides hiking the income tax exemption to Rs 3 lakh from Rs 1.8 lakh at present, the Standing Committee also suggested that 10 per tax be levied on taxable income between Rs 3-10 lakh, 20 per cent between 10-20 lakh and 30 per cent over Rs 20 lakh.

At present, 10 per cent tax levied on income between Rs 1.8-5 lakh, 20 per cent on income between Rs 5-8 lakh and 30 per cent above Rs 8 lakh.

The DTC has proposed income tax exemption limit at Rs 2 lakh, 10 per cent between Rs 2-5 lakh, 20 per cent Rs 5-10 lakh and 30 per cent above Rs 10 lakh.

With regard to tax savings scheme, the panel has proposed to raise the total tax exemptions limit under various scheme to Rs 3.2 lakh from existing Rs 1.8 lakh and Rs 2 lakh suggested by the DTC.

With regard to the wealth tax, the committee suggested that it should be levied only if the value of specified asset exceeds Rs 5 crore as against Rs 30 lakh currently and Rs 1 crore suggested by the proposed DTC Bill.

As regards the rate, it said, the wealth tax should be charged at 0.5 per cent on assets between Rs 5-20 crore, 0.7 per cent on assets between Rs 20-50 crore and 1 per cent above Rs 50 crore. The wealth tax rate now is 1 per cent.

The DTC Bill, which seeks to modernise the direct tax structure in the country, was referred to the Parliamentary Committee in August 2010.

The government, pending approval of the DTC Bill by Parliament, is likely to introduce some measures concerning taxes in the forthcoming Budget itself to be presented by Finance Minister Pranab Mukherjee in the Lok Sabha on March 16.

The Budget Session of Parliament will begin on March 12 with President Pratibha Patil addressing the joint sitting of Members of the Lok Sabha and the Rajya Sabha.

Highlights of the recommendations of Parliamentary Standing Committee on Direct Taxes Code:

* Raise I-T exemption limit to Rs 3 lakh from Rs 1.8 lakh
* Levy 10 pc tax on income between Rs 3-10 lakh
* 20 pc on income between Rs 10-20 lakh,30 pc above Rs 20 lakh
* Senior citizen benefits from 60 years instead of 65 years
* Raise tax rate on life insurance cos to 15 pc from 12.5 pc
* Retain corporate tax rate at 30 pc
* Remove Securities Transaction Tax (STT)
* Hike tax savings schemes limit to Rs 3.2 lakh,from Rs 1.8 L
* Raise wealth tax limit to Rs 5 crore from Rs 30 lakh

President Barack Obama: Millionaires should pay 30 percent in taxes

President Barack Obama said Tuesday that the US middle class deserves tax cuts, while people with incomes above $1 million per year should pay at least 30 percent in taxes.

"Congress needs to make the Buffet rule a reality," the president said. "This is common sense. If you make more than $1 million a year, you should pay a tax rate of at least 30 percent."

The Buffet rule was inspired by the complaints of billionaire investor Warren Buffet, who said last year that he is taxed at a lower rate than his secretary.

In his speech, Obama thanked citizens who brought pressure to bear so that an agreement could be achieved in Congress between Democrats and Republicans to extend the payroll-tax cut for 160 million workers.

The president said that Congress should not stop there and now has to approve a law so that the victims of the mortgage bubble can refinance their debt, given that banks are now enjoying historically low interest rates.

He also called for measures to support small and medium businesses who want to export their products instead of favouring those who send their production operations offshore.

Obama, who is seeking re-election in November, urged Americans to continue pressuring their representatives in Congress to make advances in the economy and improvements for the working class.

"Americans do not have the luxury of putting off tough decisions," he said. "There is a lot more we can do if we want to build an economy where every American can have a chance to find a job."